Correlation Between Gunkul Engineering and BCPG Public

Can any of the company-specific risk be diversified away by investing in both Gunkul Engineering and BCPG Public 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 Gunkul Engineering and BCPG Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gunkul Engineering Public and BCPG Public, you can compare the effects of market volatilities on Gunkul Engineering and BCPG Public 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 Gunkul Engineering with a short position of BCPG Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunkul Engineering and BCPG Public.

Diversification Opportunities for Gunkul Engineering and BCPG Public

0.92

Correlation Coefficient

Gunkul Engineering  BCPG Public

Almost no diversification

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

Pair Corralation between Gunkul Engineering and BCPG Public

Assuming the 90 days trading horizon Gunkul Engineering Public is expected to generate 0.95 times more return on investment than BCPG Public. However, Gunkul Engineering Public is 1.05 times less risky than BCPG Public. It trades about -0.03 of its potential returns per unit of risk. BCPG Public is currently generating about -0.06 per unit of risk. If you would invest  250.00  in Gunkul Engineering Public on September 5, 2024 and sell it today you would lose (14.00) from holding Gunkul Engineering Public or give up 5.6% of portfolio value over 90 days.

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

Gunkul Engineering Public  vs.  BCPG Public

Gunkul Engineering Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunkul Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gunkul Engineering is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BCPG Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCPG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals 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 Gunkul Engineering and BCPG Public

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

The idea behind Gunkul Engineering Public and BCPG 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.