Correlation Between PTG Energy and Gulf Energy

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

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

Diversification Opportunities for PTG Energy and Gulf Energy

-0.52

Correlation Coefficient

PTG Energy  Gulf Energy

Excellent diversification

The 3 months correlation between PTG and Gulf is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding PTG Energy PCL and Gulf Energy Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Energy Development and PTG 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 PTG Energy PCL 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 PTG Energy i.e., PTG Energy and Gulf Energy go up and down completely randomly.

Pair Corralation between PTG Energy and Gulf Energy

Assuming the 90 days trading horizon PTG Energy PCL is expected to under-perform the Gulf Energy. But the stock apears to be less risky and, when comparing its historical volatility, PTG Energy PCL is 1.31 times less risky than Gulf Energy. The stock trades about -0.19 of its potential returns per unit of risk. The Gulf Energy Development is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,575  in Gulf Energy Development on September 16, 2024 and sell it today you would earn a total of  550.00  from holding Gulf Energy Development or generate 9.87% return on investment over 90 days.

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

PTG Energy PCL  vs.  Gulf Energy Development

PTG Energy PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTG Energy PCL 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 technical and fundamental 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.

Gulf Energy Development

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Energy Development are ranked lower than 6 (%) 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.

Pair Trading with PTG Energy and Gulf Energy

The main advantage of trading using opposite PTG Energy and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTG Energy 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 PTG Energy PCL and Gulf Energy Development 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.