Correlation Between Sintana Energy and Reconnaissance Energy

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

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

Diversification Opportunities for Sintana Energy and Reconnaissance Energy

0.13

Correlation Coefficient

Sintana Energy  Reconnaissance Energy

Average diversification

The 3 months correlation between Sintana and Reconnaissance is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sintana Energy and Reconnaissance Energy Africa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reconnaissance Energy and Sintana Energy 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 Sintana Energy 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 Sintana Energy i.e., Sintana Energy and Reconnaissance Energy go up and down completely randomly.

Pair Corralation between Sintana Energy and Reconnaissance Energy

Assuming the 90 days horizon Sintana Energy is expected to under-perform the Reconnaissance Energy. In addition to that, Sintana Energy is 1.14 times more volatile than Reconnaissance Energy Africa. It trades about -0.03 of its total potential returns per unit of risk. Reconnaissance Energy Africa is currently generating about -0.02 per unit of volatility. If you would invest  79.00  in Reconnaissance Energy Africa on September 24, 2024 and sell it today you would lose (7.00) from holding Reconnaissance Energy Africa or give up 8.86% of portfolio value over 90 days.

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

Sintana Energy  vs.  Reconnaissance Energy Africa

Sintana Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sintana Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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

0 of 100

Very Weak

Over the last 90 days Reconnaissance Energy Africa has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Sintana Energy and Reconnaissance Energy

The main advantage of trading using opposite Sintana Energy and Reconnaissance Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sintana Energy 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 Sintana Energy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..