Correlation Between HEMISPHERE EGY and SES SA

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

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

Diversification Opportunities for HEMISPHERE EGY and SES SA

-0.5

Correlation Coefficient

HEMISPHERE EGY  SES SA

Very good diversification

The 3 months correlation between HEMISPHERE and SES is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY and SES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES SA and HEMISPHERE EGY 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 HEMISPHERE EGY are associated (or correlated) with SES SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES SA has no effect on the direction of HEMISPHERE EGY i.e., HEMISPHERE EGY and SES SA go up and down completely randomly.

Pair Corralation between HEMISPHERE EGY and SES SA

Assuming the 90 days trading horizon HEMISPHERE EGY is expected to generate 1.31 times more return on investment than SES SA. However, HEMISPHERE EGY is 1.31 times more volatile than SES SA. It trades about -0.01 of its potential returns per unit of risk. SES SA is currently generating about -0.06 per unit of risk. If you would invest  125.00  in HEMISPHERE EGY on September 13, 2024 and sell it today you would lose (1.00) from holding HEMISPHERE EGY or give up 0.8% of portfolio value over 90 days.

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

HEMISPHERE EGY  vs.  SES SA

HEMISPHERE EGY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEMISPHERE EGY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HEMISPHERE EGY unveiled solid returns over the last few months and may actually be approaching a breakup point.

SES SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SES SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HEMISPHERE EGY and SES SA

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

The idea behind HEMISPHERE EGY and SES SA 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.