Correlation Between Surge Energy and Petro Viking

Can any of the company-specific risk be diversified away by investing in both Surge Energy and Petro Viking at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Surge Energy and Petro Viking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Surge Energy and Petro Viking Energy, you can compare the effects of market volatilities on Surge Energy and Petro Viking and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Surge Energy with a short position of Petro Viking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surge Energy and Petro Viking.

Diversification Opportunities for Surge Energy and Petro Viking

0.13

Correlation Coefficient

Surge Energy  Petro Viking

Average diversification

The 3 months correlation between Surge and Petro is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Surge Energy and Petro Viking Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Viking Energy and Surge Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Surge Energy are associated (or correlated) with Petro Viking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Viking Energy has no effect on the direction of Surge Energy i.e., Surge Energy and Petro Viking go up and down completely randomly.

Pair Corralation between Surge Energy and Petro Viking

Assuming the 90 days horizon Surge Energy is expected to generate 53.31 times less return on investment than Petro Viking. But when comparing it to its historical volatility, Surge Energy is 27.36 times less risky than Petro Viking. It trades about 0.09 of its potential returns per unit of risk. Petro Viking Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Petro Viking Energy on December 28, 2024 and sell it today you would earn a total of  0.26  from holding Petro Viking Energy or generate 260.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Surge Energy  vs.  Petro Viking Energy

Surge Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Surge Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Petro Viking Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petro Viking Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Petro Viking reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surge Energy and Petro Viking

The main advantage of trading using opposite Surge Energy and Petro Viking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surge Energy position performs unexpectedly, Petro Viking can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Petro Viking will offset losses from the drop in Petro Viking's long position.

The idea behind Surge Energy and Petro Viking Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.