Correlation Between Permian Resources and Kiwetinohk Energy

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

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

Diversification Opportunities for Permian Resources and Kiwetinohk Energy

0.36

Correlation Coefficient

Permian Resources  Kiwetinohk Energy

Weak diversification

The 3 months correlation between Permian and Kiwetinohk is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Kiwetinohk Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiwetinohk Energy Corp and Permian 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 Permian Resources are associated (or correlated) with Kiwetinohk Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiwetinohk Energy Corp has no effect on the direction of Permian Resources i.e., Permian Resources and Kiwetinohk Energy go up and down completely randomly.

Pair Corralation between Permian Resources and Kiwetinohk Energy

Allowing for the 90-day total investment horizon Permian Resources is expected to generate 1.2 times more return on investment than Kiwetinohk Energy. However, Permian Resources is 1.2 times more volatile than Kiwetinohk Energy Corp. It trades about 0.12 of its potential returns per unit of risk. Kiwetinohk Energy Corp is currently generating about 0.13 per unit of risk. If you would invest  1,363  in Permian Resources on August 31, 2024 and sell it today you would earn a total of  203.00  from holding Permian Resources or generate 14.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Permian Resources  vs.  Kiwetinohk Energy Corp

Permian Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Permian Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Permian Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Kiwetinohk Energy Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kiwetinohk Energy Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Kiwetinohk Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Permian Resources and Kiwetinohk Energy

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

The idea behind Permian Resources and Kiwetinohk Energy Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.