Correlation Between Sintana Energy and TomCo Energy

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

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

Diversification Opportunities for Sintana Energy and TomCo Energy

-0.04

Correlation Coefficient

Sintana Energy  TomCo Energy

Good diversification

The 3 months correlation between Sintana and TomCo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sintana Energy and TomCo Energy Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomCo Energy Plc and Sintana Energy 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 Sintana Energy are associated (or correlated) with TomCo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomCo Energy Plc has no effect on the direction of Sintana Energy i.e., Sintana Energy and TomCo Energy go up and down completely randomly.

Pair Corralation between Sintana Energy and TomCo Energy

Assuming the 90 days horizon Sintana Energy is expected to generate 6.98 times less return on investment than TomCo Energy. But when comparing it to its historical volatility, Sintana Energy is 5.8 times less risky than TomCo Energy. It trades about 0.08 of its potential returns per unit of risk. TomCo Energy Plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.04  in TomCo Energy Plc on May 6, 2025 and sell it today you would earn a total of  0.03  from holding TomCo Energy Plc or generate 75.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Sintana Energy  vs.  TomCo Energy Plc

Sintana Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sintana Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sintana Energy reported solid returns over the last few months and may actually be approaching a breakup point.

TomCo Energy Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TomCo Energy Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, TomCo Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sintana Energy and TomCo Energy

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

The idea behind Sintana Energy and TomCo Energy Plc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..