Correlation Between Buyer Group and Texas Gulf

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

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

Diversification Opportunities for Buyer Group and Texas Gulf

-0.2

Correlation Coefficient

Buyer Group  Texas Gulf

Good diversification

The 3 months correlation between Buyer and Texas is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Buyer Group International and Texas Gulf Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Gulf Energy and Buyer 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 Buyer Group International are associated (or correlated) with Texas Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Gulf Energy has no effect on the direction of Buyer Group i.e., Buyer Group and Texas Gulf go up and down completely randomly.

Pair Corralation between Buyer Group and Texas Gulf

Given the investment horizon of 90 days Buyer Group is expected to generate 1.36 times less return on investment than Texas Gulf. In addition to that, Buyer Group is 4.82 times more volatile than Texas Gulf Energy. It trades about 0.04 of its total potential returns per unit of risk. Texas Gulf Energy is currently generating about 0.27 per unit of volatility. If you would invest  255,723  in Texas Gulf Energy on October 26, 2024 and sell it today you would earn a total of  26,168  from holding Texas Gulf Energy or generate 10.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Buyer Group International  vs.  Texas Gulf Energy

Buyer Group International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Buyer Group International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Buyer Group reported solid returns over the last few months and may actually be approaching a breakup point.

Texas Gulf Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Texas Gulf Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Texas Gulf is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Buyer Group and Texas Gulf

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

The idea behind Buyer Group International and Texas Gulf Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.