Correlation Between GulfSlope Energy and Parafin Corp
Can any of the company-specific risk be diversified away by investing in both GulfSlope Energy and Parafin Corp 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 GulfSlope Energy and Parafin Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GulfSlope Energy and Parafin Corp, you can compare the effects of market volatilities on GulfSlope Energy and Parafin Corp 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 GulfSlope Energy with a short position of Parafin Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GulfSlope Energy and Parafin Corp.
Diversification Opportunities for GulfSlope Energy and Parafin Corp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GulfSlope and Parafin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GulfSlope Energy and Parafin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parafin Corp and GulfSlope Energy 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 GulfSlope Energy are associated (or correlated) with Parafin Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parafin Corp has no effect on the direction of GulfSlope Energy i.e., GulfSlope Energy and Parafin Corp go up and down completely randomly.
Pair Corralation between GulfSlope Energy and Parafin Corp
Given the investment horizon of 90 days GulfSlope Energy is expected to generate 2.98 times more return on investment than Parafin Corp. However, GulfSlope Energy is 2.98 times more volatile than Parafin Corp. It trades about 0.05 of its potential returns per unit of risk. Parafin Corp is currently generating about 0.02 per unit of risk. If you would invest 0.30 in GulfSlope Energy on September 3, 2024 and sell it today you would lose (0.29) from holding GulfSlope Energy or give up 96.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.55% |
| Values | Daily Returns |
GulfSlope Energy vs. Parafin Corp
Performance |
| Timeline |
| GulfSlope Energy |
| Parafin Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GulfSlope Energy and Parafin Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GulfSlope Energy and Parafin Corp
The main advantage of trading using opposite GulfSlope Energy and Parafin Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GulfSlope Energy position performs unexpectedly, Parafin Corp 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 Parafin Corp will offset losses from the drop in Parafin Corp's long position.| GulfSlope Energy vs. Seadrill Limited | GulfSlope Energy vs. Noble plc | GulfSlope Energy vs. Borr Drilling | GulfSlope Energy vs. SCOR PK |
| Parafin Corp vs. Imperial Res | Parafin Corp vs. Strat Petroleum | Parafin Corp vs. Century Petroleum Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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