Correlation Between Kelt Exploration and Reconnaissance Energy

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

By analyzing existing cross correlation between Kelt Exploration and Reconnaissance Energy Africa, you can compare the effects of market volatilities on Kelt Exploration and Reconnaissance Energy 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 Reconnaissance Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kelt Exploration and Reconnaissance Energy.

Diversification Opportunities for Kelt Exploration and Reconnaissance Energy

-0.12

Correlation Coefficient

Kelt Exploration  Reconnaissance Energy

Good diversification

The 3 months correlation between Kelt and Reconnaissance is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kelt Exploration and Reconnaissance Energy Africa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reconnaissance Energy 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 Reconnaissance Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reconnaissance Energy has no effect on the direction of Kelt Exploration i.e., Kelt Exploration and Reconnaissance Energy go up and down completely randomly.

Pair Corralation between Kelt Exploration and Reconnaissance Energy

Assuming the 90 days horizon Kelt Exploration is expected to under-perform the Reconnaissance Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kelt Exploration is 1.32 times less risky than Reconnaissance Energy. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Reconnaissance Energy Africa is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Reconnaissance Energy Africa on September 19, 2024 and sell it today you would earn a total of  1.00  from holding Reconnaissance Energy Africa or generate 1.39% return on investment over 90 days.

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

Kelt Exploration  vs.  Reconnaissance Energy Africa

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.

Reconnaissance Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reconnaissance Energy Africa are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Reconnaissance Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kelt Exploration and Reconnaissance Energy

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

The idea behind Kelt Exploration and Reconnaissance Energy Africa 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..