Correlation Between Meta Public and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both Meta Public 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 Meta Public and Gulf Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Public and Gulf Energy Development, you can compare the effects of market volatilities on Meta Public 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 Meta Public with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Public and Gulf Energy.
Diversification Opportunities for Meta Public and Gulf Energy
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meta and Gulf is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Meta 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 Meta Public 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 Meta 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 Meta Public i.e., Meta Public and Gulf Energy go up and down completely randomly.
Pair Corralation between Meta Public and Gulf Energy
Assuming the 90 days trading horizon Meta Public is expected to under-perform the Gulf Energy. In addition to that, Meta Public is 3.02 times more volatile than Gulf Energy Development. It trades about -0.02 of its total potential returns per unit of risk. Gulf Energy Development is currently generating about 0.03 per unit of volatility. If you would invest 5,160 in Gulf Energy Development on September 13, 2024 and sell it today you would earn a total of 1,165 from holding Gulf Energy Development or generate 22.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Public vs. Gulf Energy Development
Performance |
| Timeline |
| Meta Public |
| Gulf Energy Development |
Meta Public and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Public and Gulf Energy
The main advantage of trading using opposite Meta Public and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Public 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.| Meta Public vs. Asia Biomass Public | Meta Public vs. JCK Hospitality Public | Meta Public vs. JCK International Public | Meta Public vs. Green Resources Public |
| Gulf Energy vs. Energy Absolute Public | Gulf Energy vs. BGrimm Power Public | Gulf Energy vs. Global Power Synergy | Gulf Energy vs. CP ALL Public |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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