Correlation Between Gulf Energy and Bangkok Chain

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

By analyzing existing cross correlation between Gulf Energy Development and Bangkok Chain Hospital, you can compare the effects of market volatilities on Gulf Energy and Bangkok Chain 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 Bangkok Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Energy and Bangkok Chain.

Diversification Opportunities for Gulf Energy and Bangkok Chain

0.27

Correlation Coefficient

Gulf Energy  Bangkok Chain

Modest diversification

The 3 months correlation between Gulf and Bangkok is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and Bangkok Chain Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Chain Hospital 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 are associated (or correlated) with Bangkok Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Chain Hospital has no effect on the direction of Gulf Energy i.e., Gulf Energy and Bangkok Chain go up and down completely randomly.

Pair Corralation between Gulf Energy and Bangkok Chain

Assuming the 90 days trading horizon Gulf Energy Development is expected to generate 1.36 times more return on investment than Bangkok Chain. However, Gulf Energy is 1.36 times more volatile than Bangkok Chain Hospital. It trades about 0.05 of its potential returns per unit of risk. Bangkok Chain Hospital is currently generating about -0.15 per unit of risk. If you would invest  5,700  in Gulf Energy Development on September 30, 2024 and sell it today you would earn a total of  300.00  from holding Gulf Energy Development or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gulf Energy Development  vs.  Bangkok Chain Hospital

Gulf Energy Development

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Energy Development are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Gulf Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bangkok Chain Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Chain Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators 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.

Pair Trading with Gulf Energy and Bangkok Chain

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

The idea behind Gulf Energy Development and Bangkok Chain Hospital 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.