Correlation Between Caspian Services and GAMCO Natural

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

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

Diversification Opportunities for Caspian Services and GAMCO Natural

-0.76

Correlation Coefficient

Caspian Services  GAMCO Natural

Pay attention - limited upside

The 3 months correlation between Caspian and GAMCO is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Caspian Services and GAMCO Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Natural Resources and Caspian Services 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 Caspian Services are associated (or correlated) with GAMCO Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Natural Resources has no effect on the direction of Caspian Services i.e., Caspian Services and GAMCO Natural go up and down completely randomly.

Pair Corralation between Caspian Services and GAMCO Natural

Given the investment horizon of 90 days Caspian Services is expected to generate 59.13 times more return on investment than GAMCO Natural. However, Caspian Services is 59.13 times more volatile than GAMCO Natural Resources. It trades about 0.05 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about 0.01 per unit of risk. If you would invest  0.11  in Caspian Services on October 3, 2024 and sell it today you would earn a total of  0.29  from holding Caspian Services or generate 263.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.58%
Values	Daily Returns

Caspian Services  vs.  GAMCO Natural Resources

Caspian Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caspian Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caspian Services showed solid returns over the last few months and may actually be approaching a breakup point.

GAMCO Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Caspian Services and GAMCO Natural

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

The idea behind Caspian Services and GAMCO Natural 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.