Correlation Between GeoPark and PEDEVCO Corp

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

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

Diversification Opportunities for GeoPark and PEDEVCO Corp

-0.19

Correlation Coefficient

GeoPark  PEDEVCO Corp

Good diversification

The 3 months correlation between GeoPark and PEDEVCO is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and PEDEVCO Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEDEVCO Corp and GeoPark 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 GeoPark are associated (or correlated) with PEDEVCO Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEDEVCO Corp has no effect on the direction of GeoPark i.e., GeoPark and PEDEVCO Corp go up and down completely randomly.

Pair Corralation between GeoPark and PEDEVCO Corp

Given the investment horizon of 90 days GeoPark is expected to under-perform the PEDEVCO Corp. But the stock apears to be less risky and, when comparing its historical volatility, GeoPark is 1.22 times less risky than PEDEVCO Corp. The stock trades about -0.01 of its potential returns per unit of risk. The PEDEVCO Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  109.00  in PEDEVCO Corp on August 30, 2024 and sell it today you would lose (25.00) from holding PEDEVCO Corp or give up 22.94% of portfolio value over 90 days.

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

GeoPark  vs.  PEDEVCO Corp

GeoPark

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GeoPark are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, GeoPark is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

PEDEVCO Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEDEVCO Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PEDEVCO Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GeoPark and PEDEVCO Corp

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

The idea behind GeoPark and PEDEVCO 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.