Correlation Between Comstock Resources and Strat Petroleum

Can any of the company-specific risk be diversified away by investing in both Comstock Resources and Strat Petroleum 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 Comstock Resources and Strat Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comstock Resources and Strat Petroleum, you can compare the effects of market volatilities on Comstock Resources and Strat Petroleum 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 Comstock Resources with a short position of Strat Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comstock Resources and Strat Petroleum.

Diversification Opportunities for Comstock Resources and Strat Petroleum

0.0

Correlation Coefficient

Comstock Resources  Strat Petroleum

Pay attention - limited upside

The 3 months correlation between Comstock and Strat is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Comstock Resources and Strat Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strat Petroleum and Comstock Resources 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 Comstock Resources are associated (or correlated) with Strat Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strat Petroleum has no effect on the direction of Comstock Resources i.e., Comstock Resources and Strat Petroleum go up and down completely randomly.

Pair Corralation between Comstock Resources and Strat Petroleum

Considering the 90-day investment horizon Comstock Resources is expected to generate 18.1 times less return on investment than Strat Petroleum. But when comparing it to its historical volatility, Comstock Resources is 38.93 times less risky than Strat Petroleum. It trades about 0.27 of its potential returns per unit of risk. Strat Petroleum is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Strat Petroleum on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Strat Petroleum or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Comstock Resources  vs.  Strat Petroleum

Comstock Resources

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Resources are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Comstock Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Strat Petroleum

Risk-Adjusted Performance

9 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strat Petroleum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Strat Petroleum disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comstock Resources and Strat Petroleum

The main advantage of trading using opposite Comstock Resources and Strat Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comstock Resources position performs unexpectedly, Strat Petroleum 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 Strat Petroleum will offset losses from the drop in Strat Petroleum's long position.

The idea behind Comstock Resources and Strat Petroleum 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.