Correlation Between Kelt Exploration and Pantheon Resources

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

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

Diversification Opportunities for Kelt Exploration and Pantheon Resources

0.15

Correlation Coefficient

Kelt Exploration  Pantheon Resources

Average diversification

The 3 months correlation between Kelt and Pantheon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kelt Exploration and Pantheon Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pantheon Resources Plc and Kelt Exploration 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 Kelt Exploration are associated (or correlated) with Pantheon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pantheon Resources Plc has no effect on the direction of Kelt Exploration i.e., Kelt Exploration and Pantheon Resources go up and down completely randomly.

Pair Corralation between Kelt Exploration and Pantheon Resources

Assuming the 90 days horizon Kelt Exploration is expected to under-perform the Pantheon Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kelt Exploration is 1.84 times less risky than Pantheon Resources. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Pantheon Resources Plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Pantheon Resources Plc on September 19, 2024 and sell it today you would earn a total of  14.00  from holding Pantheon Resources Plc or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kelt Exploration  vs.  Pantheon Resources Plc

Kelt Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kelt Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pantheon Resources Plc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pantheon Resources Plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pantheon Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kelt Exploration and Pantheon Resources

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

The idea behind Kelt Exploration and Pantheon Resources Plc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.