Correlation Between GULF ENERGY and AIRA Factoring

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

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

Diversification Opportunities for GULF ENERGY and AIRA Factoring

-0.04

Correlation Coefficient

GULF ENERGY  AIRA Factoring

Good diversification

The 3 months correlation between GULF and AIRA is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding GULF ENERGY DEVELOPMENT NVDR and AIRA Factoring Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIRA Factoring Public and GULF ENERGY 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 ENERGY DEVELOPMENT NVDR are associated (or correlated) with AIRA Factoring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIRA Factoring Public has no effect on the direction of GULF ENERGY i.e., GULF ENERGY and AIRA Factoring go up and down completely randomly.

Pair Corralation between GULF ENERGY and AIRA Factoring

Assuming the 90 days trading horizon GULF ENERGY DEVELOPMENT NVDR is expected to generate 0.41 times more return on investment than AIRA Factoring. However, GULF ENERGY DEVELOPMENT NVDR is 2.43 times less risky than AIRA Factoring. It trades about 0.05 of its potential returns per unit of risk. AIRA Factoring Public is currently generating about -0.02 per unit of risk. If you would invest  4,662  in GULF ENERGY DEVELOPMENT NVDR on September 26, 2024 and sell it today you would earn a total of  1,313  from holding GULF ENERGY DEVELOPMENT NVDR or generate 28.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.67%
Values	Daily Returns

GULF ENERGY DEVELOPMENT NVDR  vs.  AIRA Factoring Public

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 weak essential indicators, GULF ENERGY sustained solid returns over the last few months and may actually be approaching a breakup point.

AIRA Factoring Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIRA Factoring Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with GULF ENERGY and AIRA Factoring

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

The idea behind GULF ENERGY DEVELOPMENT NVDR and AIRA Factoring Public 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.