Correlation Between Hess and Zion Oil

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

By analyzing existing cross correlation between Hess Corporation and Zion Oil Gas, you can compare the effects of market volatilities on Hess and Zion Oil 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 Hess with a short position of Zion Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess and Zion Oil.

Diversification Opportunities for Hess and Zion Oil

-0.65

Correlation Coefficient

Hess  Zion Oil

Excellent diversification

The 3 months correlation between Hess and Zion is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hess Corp. and Zion Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zion Oil Gas and Hess 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 Hess Corporation are associated (or correlated) with Zion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zion Oil Gas has no effect on the direction of Hess i.e., Hess and Zion Oil go up and down completely randomly.

Pair Corralation between Hess and Zion Oil

If you would invest  13,081  in Hess Corporation on September 17, 2024 and sell it today you would earn a total of  468.50  from holding Hess Corporation or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Hess Corp.  vs.  Zion Oil Gas

Hess

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Hess is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Zion Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zion Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zion Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hess and Zion Oil

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

The idea behind Hess Corporation and Zion Oil Gas 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.