Correlation Between Gulf Energy and KCE Electronics
Can any of the company-specific risk be diversified away by investing in both Gulf Energy and KCE Electronics 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 KCE Electronics 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 KCE Electronics Public, you can compare the effects of market volatilities on Gulf Energy and KCE Electronics 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 KCE Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Energy and KCE Electronics.
Diversification Opportunities for Gulf Energy and KCE Electronics
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gulf and KCE is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and KCE Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCE Electronics 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 KCE Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCE Electronics Public has no effect on the direction of Gulf Energy i.e., Gulf Energy and KCE Electronics go up and down completely randomly.
Pair Corralation between Gulf Energy and KCE Electronics
Assuming the 90 days trading horizon Gulf Energy Development is expected to generate 0.79 times more return on investment than KCE Electronics. However, Gulf Energy Development is 1.27 times less risky than KCE Electronics. It trades about 0.21 of its potential returns per unit of risk. KCE Electronics Public is currently generating about -0.16 per unit of risk. If you would invest 4,050 in Gulf Energy Development on August 29, 2024 and sell it today you would earn a total of 2,200 from holding Gulf Energy Development or generate 54.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Energy Development vs. KCE Electronics Public
Performance |
| Timeline |
| Gulf Energy Development |
| KCE Electronics Public |
Gulf Energy and KCE Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Energy and KCE Electronics
The main advantage of trading using opposite Gulf Energy and KCE Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Energy position performs unexpectedly, KCE Electronics 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 KCE Electronics will offset losses from the drop in KCE Electronics' 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 |
| KCE Electronics vs. AP Public | KCE Electronics vs. Jasmine International Public | KCE Electronics vs. Asia Plus Group | KCE Electronics vs. Bangchak 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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