Correlation Between Gulf Resources and Valhi
Can any of the company-specific risk be diversified away by investing in both Gulf Resources and Valhi 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 Valhi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Resources and Valhi Inc, you can compare the effects of market volatilities on Gulf Resources and Valhi 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 Valhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Resources and Valhi.
Diversification Opportunities for Gulf Resources and Valhi
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gulf and Valhi is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Resources and Valhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valhi Inc 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 Valhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valhi Inc has no effect on the direction of Gulf Resources i.e., Gulf Resources and Valhi go up and down completely randomly.
Pair Corralation between Gulf Resources and Valhi
Given the investment horizon of 90 days Gulf Resources is expected to under-perform the Valhi. In addition to that, Gulf Resources is 1.12 times more volatile than Valhi Inc. It trades about -0.09 of its total potential returns per unit of risk. Valhi Inc is currently generating about -0.01 per unit of volatility. If you would invest 2,691 in Valhi Inc on September 12, 2024 and sell it today you would lose (272.00) from holding Valhi Inc or give up 10.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Resources vs. Valhi Inc
Performance |
| Timeline |
| Gulf Resources |
| Valhi Inc |
Gulf Resources and Valhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Resources and Valhi
The main advantage of trading using opposite Gulf Resources and Valhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Resources position performs unexpectedly, Valhi 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 Valhi will offset losses from the drop in Valhi's long position.| Gulf Resources vs. Valhi Inc | Gulf Resources vs. Huntsman | Gulf Resources vs. Lsb Industries | Gulf Resources vs. Westlake Chemical Partners |
| Valhi vs. Huntsman | Valhi vs. Lsb Industries | Valhi vs. Westlake Chemical Partners | Valhi vs. Green Plains Renewable |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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