Correlation Between Gulf Resources and Commercial Metals
Can any of the company-specific risk be diversified away by investing in both Gulf Resources and Commercial Metals 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 Resources and Commercial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Resources and Commercial Metals, you can compare the effects of market volatilities on Gulf Resources and Commercial Metals 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 Resources with a short position of Commercial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Resources and Commercial Metals.
Diversification Opportunities for Gulf Resources and Commercial Metals
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gulf and Commercial is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Resources and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals and Gulf Resources 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 Resources are associated (or correlated) with Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Gulf Resources i.e., Gulf Resources and Commercial Metals go up and down completely randomly.
Pair Corralation between Gulf Resources and Commercial Metals
Given the investment horizon of 90 days Gulf Resources is expected to under-perform the Commercial Metals. In addition to that, Gulf Resources is 2.08 times more volatile than Commercial Metals. It trades about -0.06 of its total potential returns per unit of risk. Commercial Metals is currently generating about 0.03 per unit of volatility. If you would invest 4,831 in Commercial Metals on August 23, 2024 and sell it today you would earn a total of 1,213 from holding Commercial Metals or generate 25.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Resources vs. Commercial Metals
Performance |
| Timeline |
| Gulf Resources |
| Commercial Metals |
Gulf Resources and Commercial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Resources and Commercial Metals
The main advantage of trading using opposite Gulf Resources and Commercial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Resources position performs unexpectedly, Commercial Metals 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 Commercial Metals will offset losses from the drop in Commercial Metals' long position.| Gulf Resources vs. Energy and Environmental | Gulf Resources vs. Alumifuel Pwr Corp | Gulf Resources vs. First Graphene | Gulf Resources vs. ASP Isotopes Common |
| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals vs. Universal Stainless Alloy |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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