Correlation Between Sky Petroleum and ConocoPhillips

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

By analyzing existing cross correlation between Sky Petroleum and ConocoPhillips, you can compare the effects of market volatilities on Sky Petroleum and ConocoPhillips 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 ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Petroleum and ConocoPhillips.

Diversification Opportunities for Sky Petroleum and ConocoPhillips

0.0

Correlation Coefficient

Sky Petroleum  ConocoPhillips

Pay attention - limited upside

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

Pair Corralation between Sky Petroleum and ConocoPhillips

If you would invest  11,189  in ConocoPhillips on February 26, 2024 and sell it today you would earn a total of  536.00  from holding ConocoPhillips or generate 4.79% return on investment over 90 days.

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

Sky Petroleum  vs.  ConocoPhillips

Sky Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sky Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sky Petroleum is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ConocoPhillips

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, ConocoPhillips is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sky Petroleum and ConocoPhillips

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

The idea behind Sky Petroleum and ConocoPhillips 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.