Correlation Between Gulf Energy and Aqua Public
Can any of the company-specific risk be diversified away by investing in both Gulf Energy and Aqua Public 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 Aqua Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Energy Development and Aqua Public, you can compare the effects of market volatilities on Gulf Energy and Aqua Public 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 Aqua Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Energy and Aqua Public.
Diversification Opportunities for Gulf Energy and Aqua Public
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gulf and Aqua is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and Aqua Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Public 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 are associated (or correlated) with Aqua Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Public has no effect on the direction of Gulf Energy i.e., Gulf Energy and Aqua Public go up and down completely randomly.
Pair Corralation between Gulf Energy and Aqua Public
Assuming the 90 days trading horizon Gulf Energy Development is expected to under-perform the Aqua Public. But the stock apears to be less risky and, when comparing its historical volatility, Gulf Energy Development is 1.25 times less risky than Aqua Public. The stock trades about -0.23 of its potential returns per unit of risk. The Aqua Public is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Aqua Public on September 1, 2024 and sell it today you would lose (2.00) from holding Aqua Public or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Energy Development vs. Aqua Public
Performance |
| Timeline |
| Gulf Energy Development |
| Aqua Public |
Gulf Energy and Aqua Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Energy and Aqua Public
The main advantage of trading using opposite Gulf Energy and Aqua Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Energy position performs unexpectedly, Aqua Public 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 Aqua Public will offset losses from the drop in Aqua Public's long position.| Gulf Energy vs. Energy Absolute Public | Gulf Energy vs. BGrimm Power Public | Gulf Energy vs. Global Power Synergy | Gulf Energy vs. CP ALL 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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