Correlation Between Stamper Oil and Caspian Services

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

By analyzing existing cross correlation between Stamper Oil Gas and Caspian Services, you can compare the effects of market volatilities on Stamper Oil and Caspian Services 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 Stamper Oil with a short position of Caspian Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stamper Oil and Caspian Services.

Diversification Opportunities for Stamper Oil and Caspian Services

-0.49

Correlation Coefficient

Stamper Oil  Caspian Services

Very good diversification

The 3 months correlation between Stamper and Caspian is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stamper Oil Gas and Caspian Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caspian Services and Stamper Oil 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 Stamper Oil Gas are associated (or correlated) with Caspian Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caspian Services has no effect on the direction of Stamper Oil i.e., Stamper Oil and Caspian Services go up and down completely randomly.

Pair Corralation between Stamper Oil and Caspian Services

Assuming the 90 days horizon Stamper Oil is expected to generate 78.2 times less return on investment than Caspian Services. In addition to that, Stamper Oil is 1.81 times more volatile than Caspian Services. It trades about 0.0 of its total potential returns per unit of risk. Caspian Services is currently generating about 0.12 per unit of volatility. If you would invest  0.21  in Caspian Services on September 22, 2024 and sell it today you would earn a total of  0.19  from holding Caspian Services or generate 90.48% return on investment over 90 days.

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

Stamper Oil Gas  vs.  Caspian Services

Stamper Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stamper Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Stamper Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Caspian Services

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Stamper Oil and Caspian Services

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

The idea behind Stamper Oil Gas and Caspian Services 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.