Stock Market - Oil correlation

Rather than relying on my eyes I use the correlation indicator to see if I can get a better anwser. This indicator is calculated over two time series. It is 1 when the two series correlate perfectly (each move of one is matched by a move of the other in the same direction) and it is -1 when they anti-correlate perfectly (each move of one is matched by a move of the other one in the opposite direction). It is 0 when they do not correlate at all (the relationship between the two series is random like tossing repeatedly two coins). Obviously, either perfect correlation or anti-correlation imply that the two series are related, either because one is a function of the other, or because they are both functions of a third (unknown) series. The correlation indicator is calculated over a certain period of time. Using a short period will show short-term correlations, if any, using a long period will average the short-term effects out and show long-term correlations.

The chart below shows the correlation indicator between the SPX contract and the crude oil contract over 20 years, calculated using periods of 20, 60 and 240 days, respectively.



What one can draw from the data is that, no matter the time frame one is looking at, the two markets either correlate or anti-correlate for extended periods of time, with generally quick transitions from one regime to the other one. Neither regime appear to be prevalent over the other. Can I attempt to explain or predict one market from the other? Not really, at this point. Even if they are correlating or anti-correlating most of the time, the transitions between regimes seem to occur randomly.

Categories: stock market, correlations

Stocks close higher on drop in oil prices

These days market commentators like to explain stock market movements by what happens in the oil market. This happens when the stock market appears to move in opposition to the price of crude oil, that is when it appears to be anti-correlated. Is it for real or mere coincidence? The long term chart below shows both the SPX future contract and the crude oil future contract over the long term. Though I can see periods when they seem to move in opposite directions, more recently (since '99) they appear to move in lockstep more than not.




Categories: stock market, correlations

ARMM was DSQZ

Yahoo! has almost nothing on ARMM. It looks like another Company that markets only one product. No filings or other reports available anywhere, not even on the Pink Sheets. However, digging a little deeper one can find that American Resource MG was born out of the re-organization of Dr. Squeeze International (DSQZ) on June 2001. I have been unable to figure out what the business of this other Company ever was. From the chart below, showing the combined price history of DSQZ and later ARMM, it looks like the original Company went public, went bust, re-organized under a new name and possibly new management, but it is still in the dungeon.




Categories: penny stocks

ARMM

My quest in the belly of capitalism continues with an email that I received on July 9 2004, from "Ethan Salgado" tywbsnatls@yahoo.com , urging me to buy American Resource Management, Inc. (ARMM), with a 3-5 days target of $0.34 from a current price of $0.11. This Company appears to be "dedicated to developing energy efficiency monitoring programs for commercial/industrial HVAC systems principally made up of centrifugal chillers and boilers". The only reason provided to buy is the announcement of an online service. Usual disclaimers follow including the 17(b) statement where they disclose that they own the stock and they are eager to sell it.

The online service must not have done much, though, since ARMM price has been obliterated since then, as the chart below shows:

Click on the chart to see it full size.


Categories: penny stocks

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