Correlation Between Asia Green and GULF ENERGY
Can any of the company-specific risk be diversified away by investing in both Asia Green 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 Asia Green and GULF ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Green Energy and GULF ENERGY DEVELOPMENT NVDR, you can compare the effects of market volatilities on Asia Green 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 Asia Green with a short position of GULF ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Green and GULF ENERGY.
Diversification Opportunities for Asia Green and GULF ENERGY
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asia and GULF is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Asia Green Energy 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 Asia Green 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 Asia Green Energy 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 Asia Green i.e., Asia Green and GULF ENERGY go up and down completely randomly.
Pair Corralation between Asia Green and GULF ENERGY
Assuming the 90 days trading horizon Asia Green Energy is expected to generate 28.34 times more return on investment than GULF ENERGY. However, Asia Green is 28.34 times more volatile than GULF ENERGY DEVELOPMENT NVDR. It trades about 0.04 of its potential returns per unit of risk. GULF ENERGY DEVELOPMENT NVDR is currently generating about 0.02 per unit of risk. If you would invest 308.00 in Asia Green Energy on September 25, 2024 and sell it today you would lose (187.00) from holding Asia Green Energy or give up 60.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 92.74% |
Values | Daily Returns |
Asia Green Energy vs. GULF ENERGY DEVELOPMENT NVDR
Performance |
Timeline |
Asia Green Energy |
GULF ENERGY DEVELOPMENT |
Asia Green and GULF ENERGY Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asia Green and GULF ENERGY
The main advantage of trading using opposite Asia Green and GULF ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Green 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.Asia Green vs. Unimit Engineering Public | Asia Green vs. Union Petrochemical Public | Asia Green vs. Eureka Design Public | Asia Green vs. Winner Group Enterprise |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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