Correlation Between Gulf Energy and ONE Enterprise
Can any of the company-specific risk be diversified away by investing in both Gulf Energy and ONE Enterprise 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 ONE Enterprise 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 The ONE Enterprise, you can compare the effects of market volatilities on Gulf Energy and ONE Enterprise 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 ONE Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Energy and ONE Enterprise.
Diversification Opportunities for Gulf Energy and ONE Enterprise
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gulf and ONE is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and The ONE Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONE Enterprise 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 ONE Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONE Enterprise has no effect on the direction of Gulf Energy i.e., Gulf Energy and ONE Enterprise go up and down completely randomly.
Pair Corralation between Gulf Energy and ONE Enterprise
Assuming the 90 days trading horizon Gulf Energy Development is expected to generate 1.29 times more return on investment than ONE Enterprise. However, Gulf Energy is 1.29 times more volatile than The ONE Enterprise. It trades about -0.09 of its potential returns per unit of risk. The ONE Enterprise is currently generating about -0.15 per unit of risk. If you would invest 6,525 in Gulf Energy Development on August 29, 2024 and sell it today you would lose (250.00) from holding Gulf Energy Development or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Energy Development vs. The ONE Enterprise
Performance |
| Timeline |
| Gulf Energy Development |
| ONE Enterprise |
Gulf Energy and ONE Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Energy and ONE Enterprise
The main advantage of trading using opposite Gulf Energy and ONE Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Energy position performs unexpectedly, ONE Enterprise 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 ONE Enterprise will offset losses from the drop in ONE Enterprise'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 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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