Correlation Between Ratch Group and GULF ENERGY

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

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

Diversification Opportunities for Ratch Group and GULF ENERGY

-0.28

Correlation Coefficient

Ratch Group  GULF ENERGY

Very good diversification

The 3 months correlation between Ratch and GULF is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ratch Group Public and GULF ENERGY DEVELOPMENT NVDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GULF ENERGY DEVELOPMENT and Ratch Group 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 Ratch Group Public 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 Ratch Group i.e., Ratch Group and GULF ENERGY go up and down completely randomly.

Pair Corralation between Ratch Group and GULF ENERGY

Assuming the 90 days trading horizon Ratch Group Public is expected to generate 32.8 times more return on investment than GULF ENERGY. However, Ratch Group is 32.8 times more volatile than GULF ENERGY DEVELOPMENT NVDR. It trades about 0.11 of its potential returns per unit of risk. GULF ENERGY DEVELOPMENT NVDR is currently generating about 0.11 per unit of risk. If you would invest  3,612  in Ratch Group Public on September 26, 2024 and sell it today you would lose (587.00) from holding Ratch Group Public or give up 16.25% of portfolio value over 90 days.

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

Ratch Group Public  vs.  GULF ENERGY DEVELOPMENT NVDR

Ratch Group Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ratch Group Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Ratch Group reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Ratch Group and GULF ENERGY

The main advantage of trading using opposite Ratch Group and GULF ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ratch Group 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 Ratch Group Public and GULF ENERGY DEVELOPMENT NVDR 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.