Correlation Between Airports and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both Airports and Gulf 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 Airports and Gulf Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airports of Thailand and Gulf Energy Development, you can compare the effects of market volatilities on Airports and Gulf 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 Airports with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Gulf Energy.
Diversification Opportunities for Airports and Gulf Energy
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Airports and Gulf is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Gulf Energy Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Energy Development and Airports 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 Airports of Thailand are associated (or correlated) with Gulf Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Energy Development has no effect on the direction of Airports i.e., Airports and Gulf Energy go up and down completely randomly.
Pair Corralation between Airports and Gulf Energy
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.69 times more return on investment than Gulf Energy. However, Airports of Thailand is 1.45 times less risky than Gulf Energy. It trades about -0.03 of its potential returns per unit of risk. Gulf Energy Development is currently generating about -0.09 per unit of risk. If you would invest 6,175 in Airports of Thailand on August 29, 2024 and sell it today you would lose (50.00) from holding Airports of Thailand or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Gulf Energy Development
Performance |
| Timeline |
| Airports of Thailand |
| Gulf Energy Development |
Airports and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Gulf Energy
The main advantage of trading using opposite Airports and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Gulf 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 Gulf Energy will offset losses from the drop in Gulf Energy's long position.| Airports vs. Tata Steel Public | Airports vs. Thaifoods Group Public | Airports vs. TMT Steel Public | Airports vs. The Erawan Group |
| Gulf Energy vs. Energy Absolute Public | Gulf Energy vs. BGrimm Power Public | Gulf Energy vs. Global Power Synergy | Gulf Energy vs. CP ALL Public |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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