Correlation Between Hess and Sky Petroleum

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

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

Diversification Opportunities for Hess and Sky Petroleum

0.0

Correlation Coefficient

Hess  Sky Petroleum

Pay attention - limited upside

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

Pair Corralation between Hess and Sky Petroleum

If you would invest  14,533  in Hess Corporation on February 29, 2024 and sell it today you would earn a total of  672.00  from holding Hess Corporation or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hess Corp.  vs.  Sky Petroleum

Hess

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Hess is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Hess and Sky Petroleum

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

The idea behind Hess Corporation and Sky Petroleum 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.