Correlation Between Union Petrochemical and Gunkul Engineering
Can any of the company-specific risk be diversified away by investing in both Union Petrochemical and Gunkul Engineering 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 Union Petrochemical and Gunkul Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Petrochemical Public and Gunkul Engineering Public, you can compare the effects of market volatilities on Union Petrochemical and Gunkul Engineering 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 Union Petrochemical with a short position of Gunkul Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Petrochemical and Gunkul Engineering.
Diversification Opportunities for Union Petrochemical and Gunkul Engineering
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Union and Gunkul is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Union Petrochemical Public and Gunkul Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunkul Engineering Public and Union Petrochemical 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 Union Petrochemical Public are associated (or correlated) with Gunkul Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunkul Engineering Public has no effect on the direction of Union Petrochemical i.e., Union Petrochemical and Gunkul Engineering go up and down completely randomly.
Pair Corralation between Union Petrochemical and Gunkul Engineering
Assuming the 90 days trading horizon Union Petrochemical Public is expected to generate 20.62 times more return on investment than Gunkul Engineering. However, Union Petrochemical is 20.62 times more volatile than Gunkul Engineering Public. It trades about 0.04 of its potential returns per unit of risk. Gunkul Engineering Public is currently generating about -0.06 per unit of risk. If you would invest 158.00 in Union Petrochemical Public on August 26, 2024 and sell it today you would lose (89.00) from holding Union Petrochemical Public or give up 56.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Petrochemical Public vs. Gunkul Engineering Public
Performance |
| Timeline |
| Union Petrochemical |
| Gunkul Engineering Public |
Union Petrochemical and Gunkul Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Petrochemical and Gunkul Engineering
The main advantage of trading using opposite Union Petrochemical and Gunkul Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Petrochemical position performs unexpectedly, Gunkul Engineering 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 Gunkul Engineering will offset losses from the drop in Gunkul Engineering's long position.| Union Petrochemical vs. Vibhavadi Medical Center | Union Petrochemical vs. WHA Public | Union Petrochemical vs. Tata Steel Public | Union Petrochemical vs. TPI Polene Public |
| Gunkul Engineering vs. Gulf Energy Development | Gunkul Engineering vs. Energy Absolute Public | Gunkul Engineering vs. Banpu Public | Gunkul Engineering vs. WHA 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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