Correlation Between AdvanSix and Gulf Resources

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

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

Diversification Opportunities for AdvanSix and Gulf Resources

0.06

Correlation Coefficient

AdvanSix  Gulf Resources

Significant diversification

The 3 months correlation between AdvanSix and Gulf is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix and Gulf Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Resources and AdvanSix 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 AdvanSix are associated (or correlated) with Gulf Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Resources has no effect on the direction of AdvanSix i.e., AdvanSix and Gulf Resources go up and down completely randomly.

Pair Corralation between AdvanSix and Gulf Resources

Given the investment horizon of 90 days AdvanSix is expected to generate 0.53 times more return on investment than Gulf Resources. However, AdvanSix is 1.88 times less risky than Gulf Resources. It trades about -0.02 of its potential returns per unit of risk. Gulf Resources is currently generating about -0.06 per unit of risk. If you would invest  4,085  in AdvanSix on October 5, 2024 and sell it today you would lose (1,320) from holding AdvanSix or give up 32.31% of portfolio value over 90 days.

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

AdvanSix  vs.  Gulf Resources

AdvanSix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Gulf Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gulf Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AdvanSix and Gulf Resources

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

The idea behind AdvanSix and Gulf Resources 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 Commodity Directory module to find actively traded commodities issued by global exchanges.