Correlation Between SCG Packaging and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both SCG Packaging 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 SCG Packaging and Gulf Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCG Packaging Public and Gulf Energy Development, you can compare the effects of market volatilities on SCG Packaging 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 SCG Packaging with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG Packaging and Gulf Energy.
Diversification Opportunities for SCG Packaging and Gulf Energy
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between SCG and Gulf is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding SCG Packaging 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 SCG Packaging 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 SCG Packaging 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 SCG Packaging i.e., SCG Packaging and Gulf Energy go up and down completely randomly.
Pair Corralation between SCG Packaging and Gulf Energy
Assuming the 90 days trading horizon SCG Packaging Public is expected to generate 41.02 times more return on investment than Gulf Energy. However, SCG Packaging is 41.02 times more volatile than Gulf Energy Development. It trades about 0.05 of its potential returns per unit of risk. Gulf Energy Development is currently generating about 0.09 per unit of risk. If you would invest 3,722 in SCG Packaging Public on September 3, 2024 and sell it today you would lose (1,582) from holding SCG Packaging Public or give up 42.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCG Packaging Public vs. Gulf Energy Development
Performance |
| Timeline |
| SCG Packaging Public |
| Gulf Energy Development |
SCG Packaging and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCG Packaging and Gulf Energy
The main advantage of trading using opposite SCG Packaging and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCG Packaging 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.| SCG Packaging vs. AJ Plast Public | SCG Packaging vs. Thai Metal Drum | SCG Packaging vs. Thantawan Industry Public | SCG Packaging vs. Thai Film Industries |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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