Correlation Between Ratch Group and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both Ratch Group 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 Ratch Group and Gulf Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ratch Group Public and Gulf Energy Development, you can compare the effects of market volatilities on Ratch Group 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 Ratch Group with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ratch Group and Gulf Energy.
Diversification Opportunities for Ratch Group and Gulf Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ratch and Gulf is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ratch Group 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 Ratch Group 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 Ratch Group 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 Ratch Group i.e., Ratch Group and Gulf Energy go up and down completely randomly.
Pair Corralation between Ratch Group and Gulf Energy
Assuming the 90 days trading horizon Ratch Group is expected to generate 3.82 times less return on investment than Gulf Energy. But when comparing it to its historical volatility, Ratch Group Public is 1.08 times less risky than Gulf Energy. It trades about 0.06 of its potential returns per unit of risk. Gulf Energy Development is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,150 in Gulf Energy Development on August 25, 2024 and sell it today you would earn a total of 2,250 from holding Gulf Energy Development or generate 54.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ratch Group Public vs. Gulf Energy Development
Performance |
| Timeline |
| Ratch Group Public |
| Gulf Energy Development |
Ratch Group and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ratch Group and Gulf Energy
The main advantage of trading using opposite Ratch Group and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ratch Group 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.| Ratch Group vs. WHA Public | Ratch Group vs. TPI Polene Power | Ratch Group vs. Bangkok Expressway and | Ratch Group vs. BGrimm Power Public |
| Gulf Energy vs. WHA Public | Gulf Energy vs. TPI Polene Power | Gulf Energy vs. Bangkok Expressway and | Gulf Energy vs. BGrimm Power 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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