Correlation Between Sky Petroleum and West Canyon

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Can any of the company-specific risk be diversified away by investing in both Sky Petroleum and West Canyon 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 Sky Petroleum and West Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Petroleum and West Canyon Energy, you can compare the effects of market volatilities on Sky Petroleum and West Canyon 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 Sky Petroleum with a short position of West Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Petroleum and West Canyon.

Diversification Opportunities for Sky Petroleum and West Canyon

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Sky and West is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sky Petroleum and West Canyon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Canyon Energy and Sky Petroleum 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 Sky Petroleum are associated (or correlated) with West Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Canyon Energy has no effect on the direction of Sky Petroleum i.e., Sky Petroleum and West Canyon go up and down completely randomly.

Pair Corralation between Sky Petroleum and West Canyon

If you would invest  5.00  in Sky Petroleum on September 17, 2024 and sell it today you would earn a total of  2.00  from holding Sky Petroleum or generate 40.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Sky Petroleum  vs.  West Canyon Energy

 Performance 
       Timeline  
Sky Petroleum 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Sky Petroleum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Sky Petroleum demonstrated solid returns over the last few months and may actually be approaching a breakup point.
West Canyon Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days West Canyon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, West Canyon is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sky Petroleum and West Canyon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sky Petroleum and West Canyon

The main advantage of trading using opposite Sky Petroleum and West Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Petroleum position performs unexpectedly, West Canyon 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 West Canyon will offset losses from the drop in West Canyon's long position.
The idea behind Sky Petroleum and West Canyon Energy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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