Correlation Between Gulf Resources and Energy
Can any of the company-specific risk be diversified away by investing in both Gulf Resources and 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 Resources and Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Resources and Energy and Environmental, you can compare the effects of market volatilities on Gulf Resources and 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 Resources with a short position of Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Resources and Energy.
Diversification Opportunities for Gulf Resources and Energy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gulf and Energy is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Resources and Energy and Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Environmental 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Environmental has no effect on the direction of Gulf Resources i.e., Gulf Resources and Energy go up and down completely randomly.
Pair Corralation between Gulf Resources and Energy
Given the investment horizon of 90 days Gulf Resources is expected to under-perform the Energy. But the stock apears to be less risky and, when comparing its historical volatility, Gulf Resources is 1.64 times less risky than Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Energy and Environmental is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Energy and Environmental on November 29, 2024 and sell it today you would lose (6.00) from holding Energy and Environmental or give up 46.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Resources vs. Energy and Environmental
Performance |
| Timeline |
| Gulf Resources |
| Energy and Environmental |
Gulf Resources and Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Resources and Energy
The main advantage of trading using opposite Gulf Resources and Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Resources position performs unexpectedly, 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 Energy will offset losses from the drop in Energy's 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 |
| Energy vs. Alumifuel Pwr Corp | Energy vs. Gulf Resources | Energy vs. First Graphene | Energy vs. ASP Isotopes Common |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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