Correlation Between GULF ENERGY and BANPU POWER
Can any of the company-specific risk be diversified away by investing in both GULF ENERGY and BANPU POWER 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 GULF ENERGY and BANPU POWER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GULF ENERGY DEVELOPMENT NVDR and BANPU POWER, you can compare the effects of market volatilities on GULF ENERGY and BANPU POWER 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 GULF ENERGY with a short position of BANPU POWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of GULF ENERGY and BANPU POWER.
Diversification Opportunities for GULF ENERGY and BANPU POWER
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GULF and BANPU is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding GULF ENERGY DEVELOPMENT NVDR and BANPU POWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANPU POWER and GULF 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 GULF ENERGY DEVELOPMENT NVDR are associated (or correlated) with BANPU POWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANPU POWER has no effect on the direction of GULF ENERGY i.e., GULF ENERGY and BANPU POWER go up and down completely randomly.
Pair Corralation between GULF ENERGY and BANPU POWER
Assuming the 90 days trading horizon GULF ENERGY DEVELOPMENT NVDR is expected to generate 1.59 times more return on investment than BANPU POWER. However, GULF ENERGY is 1.59 times more volatile than BANPU POWER. It trades about 0.06 of its potential returns per unit of risk. BANPU POWER is currently generating about -0.02 per unit of risk. If you would invest 4,662 in GULF ENERGY DEVELOPMENT NVDR on September 12, 2024 and sell it today you would earn a total of 1,763 from holding GULF ENERGY DEVELOPMENT NVDR or generate 37.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GULF ENERGY DEVELOPMENT NVDR vs. BANPU POWER
Performance |
| Timeline |
| GULF ENERGY DEVELOPMENT |
| BANPU POWER |
GULF ENERGY and BANPU POWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GULF ENERGY and BANPU POWER
The main advantage of trading using opposite GULF ENERGY and BANPU POWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GULF ENERGY position performs unexpectedly, BANPU POWER 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 BANPU POWER will offset losses from the drop in BANPU POWER's long position.| GULF ENERGY vs. Super Energy | GULF ENERGY vs. The Erawan Group | GULF ENERGY vs. XSpring Capital Public | GULF ENERGY vs. Ditto Public |
| BANPU POWER vs. Charoen Pokphand Foods | BANPU POWER vs. The Siam Cement | BANPU POWER vs. Ratch Group Public | BANPU POWER vs. Amata 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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