Correlation Between Gulf Energy and PTG Energy
Can any of the company-specific risk be diversified away by investing in both Gulf Energy and PTG Energy 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 PTG Energy 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 PTG Energy PCL, you can compare the effects of market volatilities on Gulf Energy and PTG Energy 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 PTG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Energy and PTG Energy.
Diversification Opportunities for Gulf Energy and PTG Energy
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gulf and PTG is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and PTG Energy PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTG Energy 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 PTG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTG Energy PCL has no effect on the direction of Gulf Energy i.e., Gulf Energy and PTG Energy go up and down completely randomly.
Pair Corralation between Gulf Energy and PTG Energy
Assuming the 90 days trading horizon Gulf Energy Development is expected to generate 0.91 times more return on investment than PTG Energy. However, Gulf Energy Development is 1.1 times less risky than PTG Energy. It trades about -0.09 of its potential returns per unit of risk. PTG Energy PCL is currently generating about -0.22 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Energy Development vs. PTG Energy PCL
Performance |
| Timeline |
| Gulf Energy Development |
| PTG Energy PCL |
Gulf Energy and PTG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Energy and PTG Energy
The main advantage of trading using opposite Gulf Energy and PTG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Energy position performs unexpectedly, PTG Energy 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 PTG Energy will offset losses from the drop in PTG Energy'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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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