Correlation Between Gulf Energy and Com7 PCL
Can any of the company-specific risk be diversified away by investing in both Gulf Energy and Com7 PCL 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 Com7 PCL 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 Com7 PCL, you can compare the effects of market volatilities on Gulf Energy and Com7 PCL 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 Com7 PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Energy and Com7 PCL.
Diversification Opportunities for Gulf Energy and Com7 PCL
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gulf and Com7 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and Com7 PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Com7 PCL 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 Com7 PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Com7 PCL has no effect on the direction of Gulf Energy i.e., Gulf Energy and Com7 PCL go up and down completely randomly.
Pair Corralation between Gulf Energy and Com7 PCL
Assuming the 90 days trading horizon Gulf Energy Development is expected to generate 0.66 times more return on investment than Com7 PCL. However, Gulf Energy Development is 1.51 times less risky than Com7 PCL. It trades about 0.03 of its potential returns per unit of risk. Com7 PCL is currently generating about 0.0 per unit of risk. If you would invest 5,233 in Gulf Energy Development on August 30, 2024 and sell it today you would earn a total of 1,017 from holding Gulf Energy Development or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Energy Development vs. Com7 PCL
Performance |
| Timeline |
| Gulf Energy Development |
| Com7 PCL |
Gulf Energy and Com7 PCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Energy and Com7 PCL
The main advantage of trading using opposite Gulf Energy and Com7 PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Energy position performs unexpectedly, Com7 PCL 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 Com7 PCL will offset losses from the drop in Com7 PCL's long position.| Gulf Energy vs. WHA Public | Gulf Energy vs. Global Power Synergy | Gulf Energy vs. TPI Polene Power | Gulf Energy vs. Bangkok Expressway and |
| Com7 PCL vs. CP ALL Public | Com7 PCL vs. Home Product Center | Com7 PCL vs. Minor International Public | Com7 PCL vs. Bangkok Dusit Medical |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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