Correlation Between Thai German and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both Thai German 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 Thai German and Gulf Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai German Products Public and Gulf Energy Development, you can compare the effects of market volatilities on Thai German 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 Thai German with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai German and Gulf Energy.
Diversification Opportunities for Thai German and Gulf Energy
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thai and Gulf is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Thai German Products 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 Thai German 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 Thai German Products 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 Thai German i.e., Thai German and Gulf Energy go up and down completely randomly.
Pair Corralation between Thai German and Gulf Energy
Assuming the 90 days trading horizon Thai German Products Public is expected to under-perform the Gulf Energy. In addition to that, Thai German is 2.28 times more volatile than Gulf Energy Development. It trades about -0.05 of its total potential returns per unit of risk. Gulf Energy Development is currently generating about -0.01 per unit of volatility. If you would invest 6,400 in Gulf Energy Development on September 13, 2024 and sell it today you would lose (75.00) from holding Gulf Energy Development or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai German Products Public vs. Gulf Energy Development
Performance |
| Timeline |
| Thai German Products |
| Gulf Energy Development |
Thai German and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai German and Gulf Energy
The main advantage of trading using opposite Thai German and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai German 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.| Thai German vs. Thantawan Industry Public | Thai German vs. The Erawan Group | Thai German vs. Jay Mart Public | Thai German vs. Airports of Thailand |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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