Correlation Between GULF ENERGY and Electricity Generating
Can any of the company-specific risk be diversified away by investing in both GULF ENERGY and Electricity Generating 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 Electricity Generating 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 Electricity Generating Public, you can compare the effects of market volatilities on GULF ENERGY and Electricity Generating 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 Electricity Generating. Check out your portfolio center. Please also check ongoing floating volatility patterns of GULF ENERGY and Electricity Generating.
Diversification Opportunities for GULF ENERGY and Electricity Generating
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GULF and Electricity is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding GULF ENERGY DEVELOPMENT NVDR and Electricity Generating Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electricity Generating 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 Electricity Generating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electricity Generating has no effect on the direction of GULF ENERGY i.e., GULF ENERGY and Electricity Generating go up and down completely randomly.
Pair Corralation between GULF ENERGY and Electricity Generating
Assuming the 90 days trading horizon GULF ENERGY DEVELOPMENT NVDR is expected to generate 2.57 times more return on investment than Electricity Generating. However, GULF ENERGY is 2.57 times more volatile than Electricity Generating Public. It trades about 0.11 of its potential returns per unit of risk. Electricity Generating Public is currently generating about 0.15 per unit of risk. If you would invest 4,750 in GULF ENERGY DEVELOPMENT NVDR on September 2, 2024 and sell it today you would earn a total of 1,300 from holding GULF ENERGY DEVELOPMENT NVDR or generate 27.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GULF ENERGY DEVELOPMENT NVDR vs. Electricity Generating Public
Performance |
| Timeline |
| GULF ENERGY DEVELOPMENT |
| Electricity Generating |
GULF ENERGY and Electricity Generating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GULF ENERGY and Electricity Generating
The main advantage of trading using opposite GULF ENERGY and Electricity Generating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GULF ENERGY position performs unexpectedly, Electricity Generating 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 Electricity Generating will offset losses from the drop in Electricity Generating's long position.| GULF ENERGY vs. Thai Oil Public | GULF ENERGY vs. Electricity Generating Public | GULF ENERGY vs. Ratch Group Public |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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