Correlation Between Susco Public and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both Susco 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 Susco 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 Susco Public and Gulf Energy Development, you can compare the effects of market volatilities on Susco 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 Susco Public with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Susco Public and Gulf Energy.
Diversification Opportunities for Susco Public and Gulf Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Susco and Gulf is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Susco 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 Susco 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 Susco 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 Susco Public i.e., Susco Public and Gulf Energy go up and down completely randomly.
Pair Corralation between Susco Public and Gulf Energy
Assuming the 90 days trading horizon Susco Public is expected to under-perform the Gulf Energy. But the stock apears to be less risky and, when comparing its historical volatility, Susco Public is 1.16 times less risky than Gulf Energy. The stock trades about -0.16 of its potential returns per unit of risk. The Gulf Energy Development is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,675 in Gulf Energy Development on November 3, 2024 and sell it today you would earn a total of 100.00 from holding Gulf Energy Development or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Susco Public vs. Gulf Energy Development
Performance |
| Timeline |
| Susco Public |
| Gulf Energy Development |
Susco Public and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Susco Public and Gulf Energy
The main advantage of trading using opposite Susco Public and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Susco 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.| Susco Public vs. Lanna Resources Public | Susco Public vs. Thai Oil Public | Susco Public vs. Star Petroleum Refining | Susco Public vs. Ratch Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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