Correlation Between KEY Petroleum and Smartpay Holdings

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

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

Diversification Opportunities for KEY Petroleum and Smartpay Holdings

-0.65

Correlation Coefficient

KEY Petroleum  Smartpay Holdings

Excellent diversification

The 3 months correlation between KEY and Smartpay is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding KEY Petroleum and Smartpay Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartpay Holdings and KEY 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 KEY Petroleum are associated (or correlated) with Smartpay Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartpay Holdings has no effect on the direction of KEY Petroleum i.e., KEY Petroleum and Smartpay Holdings go up and down completely randomly.

Pair Corralation between KEY Petroleum and Smartpay Holdings

Assuming the 90 days trading horizon KEY Petroleum is expected to under-perform the Smartpay Holdings. In addition to that, KEY Petroleum is 2.15 times more volatile than Smartpay Holdings. It trades about -0.02 of its total potential returns per unit of risk. Smartpay Holdings is currently generating about 0.17 per unit of volatility. If you would invest  73.00  in Smartpay Holdings on April 20, 2025 and sell it today you would earn a total of  29.00  from holding Smartpay Holdings or generate 39.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

KEY Petroleum  vs.  Smartpay Holdings

KEY Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days KEY Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Smartpay Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smartpay Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Smartpay Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KEY Petroleum and Smartpay Holdings

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

The idea behind KEY Petroleum and Smartpay Holdings 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..