Correlation Between Mega Lifesciences and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both Mega Lifesciences and Gulf 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 Mega Lifesciences and Gulf Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mega Lifesciences Public and Gulf Energy Development, you can compare the effects of market volatilities on Mega Lifesciences and Gulf 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 Mega Lifesciences with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Lifesciences and Gulf Energy.
Diversification Opportunities for Mega Lifesciences and Gulf Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mega and Gulf is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mega Lifesciences Public and Gulf Energy Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Energy Development and Mega Lifesciences 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 Mega Lifesciences Public are associated (or correlated) with Gulf Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Energy Development has no effect on the direction of Mega Lifesciences i.e., Mega Lifesciences and Gulf Energy go up and down completely randomly.
Pair Corralation between Mega Lifesciences and Gulf Energy
Assuming the 90 days trading horizon Mega Lifesciences Public is expected to under-perform the Gulf Energy. But the stock apears to be less risky and, when comparing its historical volatility, Mega Lifesciences Public is 1.12 times less risky than Gulf Energy. The stock trades about -0.18 of its potential returns per unit of risk. The Gulf Energy Development is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,700 in Gulf Energy Development on August 29, 2024 and sell it today you would earn a total of 575.00 from holding Gulf Energy Development or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mega Lifesciences Public vs. Gulf Energy Development
Performance |
| Timeline |
| Mega Lifesciences Public |
| Gulf Energy Development |
Mega Lifesciences and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Lifesciences and Gulf Energy
The main advantage of trading using opposite Mega Lifesciences and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Lifesciences position performs unexpectedly, Gulf 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 Gulf Energy will offset losses from the drop in Gulf Energy's long position.| Mega Lifesciences vs. Home Product Center | Mega Lifesciences vs. Minor International Public | Mega Lifesciences vs. Com7 PCL | Mega Lifesciences vs. Bangkok Dusit Medical |
| Gulf Energy vs. WHA Public | Gulf Energy vs. Global Power Synergy | Gulf Energy vs. TPI Polene Power | Gulf Energy vs. Bangkok Expressway and |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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