Correlation Between EMC Public and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both EMC Public 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 EMC Public and Gulf Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMC Public and Gulf Energy Development, you can compare the effects of market volatilities on EMC Public 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 EMC Public with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMC Public and Gulf Energy.
Diversification Opportunities for EMC Public and Gulf Energy
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EMC and Gulf is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding EMC Public 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 EMC Public 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 EMC Public 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 EMC Public i.e., EMC Public and Gulf Energy go up and down completely randomly.
Pair Corralation between EMC Public and Gulf Energy
Assuming the 90 days trading horizon EMC Public is expected to generate 4.22 times more return on investment than Gulf Energy. However, EMC Public is 4.22 times more volatile than Gulf Energy Development. It trades about -0.04 of its potential returns per unit of risk. Gulf Energy Development is currently generating about -0.24 per unit of risk. If you would invest 9.00 in EMC Public on September 3, 2024 and sell it today you would lose (1.00) from holding EMC Public or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMC Public vs. Gulf Energy Development
Performance |
| Timeline |
| EMC Public |
| Gulf Energy Development |
EMC Public and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMC Public and Gulf Energy
The main advantage of trading using opposite EMC Public and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMC Public 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.| EMC Public vs. Asia Aviation Public | EMC Public vs. Bangkok Dusit Medical | EMC Public vs. Bangkok Expressway and | EMC Public vs. Airports of Thailand |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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