Correlation Between BANPU POWER and GULF ENERGY
Can any of the company-specific risk be diversified away by investing in both BANPU POWER 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 BANPU POWER and GULF ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANPU POWER and GULF ENERGY DEVELOPMENT NVDR, you can compare the effects of market volatilities on BANPU POWER 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 BANPU POWER with a short position of GULF ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANPU POWER and GULF ENERGY.
Diversification Opportunities for BANPU POWER and GULF ENERGY
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANPU and GULF is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BANPU POWER and GULF ENERGY DEVELOPMENT NVDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GULF ENERGY DEVELOPMENT and BANPU POWER 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 BANPU POWER 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 BANPU POWER i.e., BANPU POWER and GULF ENERGY go up and down completely randomly.
Pair Corralation between BANPU POWER and GULF ENERGY
Assuming the 90 days trading horizon BANPU POWER is expected to under-perform the GULF ENERGY. But the stock apears to be less risky and, when comparing its historical volatility, BANPU POWER is 1.74 times less risky than GULF ENERGY. The stock trades about -0.02 of its potential returns per unit of risk. The GULF ENERGY DEVELOPMENT NVDR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,349 in GULF ENERGY DEVELOPMENT NVDR on September 2, 2024 and sell it today you would earn a total of 701.00 from holding GULF ENERGY DEVELOPMENT NVDR or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANPU POWER vs. GULF ENERGY DEVELOPMENT NVDR
Performance |
| Timeline |
| BANPU POWER |
| GULF ENERGY DEVELOPMENT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
BANPU POWER and GULF ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANPU POWER and GULF ENERGY
The main advantage of trading using opposite BANPU POWER and GULF ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANPU POWER 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.The idea behind BANPU POWER and GULF ENERGY DEVELOPMENT NVDR 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.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |