Correlation Between Gulf Island and Fobi AI

Can any of the company-specific risk be diversified away by investing in both Gulf Island and Fobi AI 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 Gulf Island and Fobi AI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gulf Island Fabrication and Fobi AI, you can compare the effects of market volatilities on Gulf Island and Fobi AI 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 Gulf Island with a short position of Fobi AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and Fobi AI.

Diversification Opportunities for Gulf Island and Fobi AI

-0.92

Correlation Coefficient

Gulf Island  Fobi AI

Pay attention - limited upside

The 3 months correlation between Gulf and Fobi is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Fobi AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fobi AI and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with Fobi AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fobi AI has no effect on the direction of Gulf Island i.e., Gulf Island and Fobi AI go up and down completely randomly.

Pair Corralation between Gulf Island and Fobi AI

Given the investment horizon of 90 days Gulf Island Fabrication is expected to generate 0.15 times more return on investment than Fobi AI. However, Gulf Island Fabrication is 6.56 times less risky than Fobi AI. It trades about 0.17 of its potential returns per unit of risk. Fobi AI is currently generating about 0.0 per unit of risk. If you would invest  545.00  in Gulf Island Fabrication on September 22, 2024 and sell it today you would earn a total of  141.00  from holding Gulf Island Fabrication or generate 25.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gulf Island Fabrication  vs.  Fobi AI

Gulf Island Fabrication

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Island Fabrication are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gulf Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Fobi AI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fobi AI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Fobi AI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gulf Island and Fobi AI

The main advantage of trading using opposite Gulf Island and Fobi AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Island position performs unexpectedly, Fobi AI 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 Fobi AI will offset losses from the drop in Fobi AI's long position.

The idea behind Gulf Island Fabrication and Fobi AI 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.