Correlation Between G Capital and GULF ENERGY

Can any of the company-specific risk be diversified away by investing in both G Capital 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 G Capital and GULF ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G Capital Public and GULF ENERGY DEVELOPMENT NVDR, you can compare the effects of market volatilities on G Capital 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 G Capital with a short position of GULF ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Capital and GULF ENERGY.

Diversification Opportunities for G Capital and GULF ENERGY

-0.74

Correlation Coefficient

G Capital  GULF ENERGY

Pay attention - limited upside

The 3 months correlation between GCAP and GULF is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and GULF ENERGY DEVELOPMENT NVDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GULF ENERGY DEVELOPMENT and G Capital 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 G Capital 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 G Capital i.e., G Capital and GULF ENERGY go up and down completely randomly.

Pair Corralation between G Capital and GULF ENERGY

Assuming the 90 days trading horizon G Capital Public is expected to generate 28.34 times more return on investment than GULF ENERGY. However, G Capital is 28.34 times more volatile than GULF ENERGY DEVELOPMENT NVDR. It trades about 0.04 of its potential returns per unit of risk. GULF ENERGY DEVELOPMENT NVDR is currently generating about 0.02 per unit of risk. If you would invest  121.00  in G Capital Public on September 25, 2024 and sell it today you would lose (89.00) from holding G Capital Public or give up 73.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.53%
Values	Daily Returns

G Capital Public  vs.  GULF ENERGY DEVELOPMENT NVDR

G Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

GULF ENERGY DEVELOPMENT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GULF ENERGY DEVELOPMENT NVDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, GULF ENERGY sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Capital and GULF ENERGY

The main advantage of trading using opposite G Capital and GULF ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G Capital 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.

The idea behind G Capital Public and GULF ENERGY DEVELOPMENT NVDR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.