Correlation Between Desert Mountain and Petro Matad
Can any of the company-specific risk be diversified away by investing in both Desert Mountain and Petro Matad 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 Desert Mountain and Petro Matad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desert Mountain Energy and Petro Matad Limited, you can compare the effects of market volatilities on Desert Mountain and Petro Matad 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 Desert Mountain with a short position of Petro Matad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desert Mountain and Petro Matad.
Diversification Opportunities for Desert Mountain and Petro Matad
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Desert and Petro is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Desert Mountain Energy and Petro Matad Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Matad Limited and Desert Mountain 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 Desert Mountain Energy are associated (or correlated) with Petro Matad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Matad Limited has no effect on the direction of Desert Mountain i.e., Desert Mountain and Petro Matad go up and down completely randomly.
Pair Corralation between Desert Mountain and Petro Matad
Assuming the 90 days horizon Desert Mountain is expected to generate 4.7 times less return on investment than Petro Matad. But when comparing it to its historical volatility, Desert Mountain Energy is 4.1 times less risky than Petro Matad. It trades about 0.09 of its potential returns per unit of risk. Petro Matad Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.20 in Petro Matad Limited on August 29, 2025 and sell it today you would lose (0.20) from holding Petro Matad Limited or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Desert Mountain Energy vs. Petro Matad Limited
Performance |
| Timeline |
| Desert Mountain Energy |
| Petro Matad Limited |
Desert Mountain and Petro Matad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desert Mountain and Petro Matad
The main advantage of trading using opposite Desert Mountain and Petro Matad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desert Mountain position performs unexpectedly, Petro Matad 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 Petro Matad will offset losses from the drop in Petro Matad's long position.| Desert Mountain vs. BOS Better Online | Desert Mountain vs. Kingdee International Software | Desert Mountain vs. Degama Software Solutions | Desert Mountain vs. Check Point Software |
| Petro Matad vs. IDP Education Limited | Petro Matad vs. Skillful Craftsman Education | Petro Matad vs. ARIA Wireless Systems | Petro Matad vs. Wireless Xcessories Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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