Correlation Between Gulf Island and Beyond Oil

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

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

Diversification Opportunities for Gulf Island and Beyond Oil

-0.54

Correlation Coefficient

Gulf Island  Beyond Oil

Excellent diversification

The 3 months correlation between Gulf and Beyond is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Beyond Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Oil and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with Beyond Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Oil has no effect on the direction of Gulf Island i.e., Gulf Island and Beyond Oil go up and down completely randomly.

Pair Corralation between Gulf Island and Beyond Oil

Given the investment horizon of 90 days Gulf Island is expected to generate 2.65 times less return on investment than Beyond Oil. But when comparing it to its historical volatility, Gulf Island Fabrication is 2.19 times less risky than Beyond Oil. It trades about 0.04 of its potential returns per unit of risk. Beyond Oil is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  86.00  in Beyond Oil on September 30, 2024 and sell it today you would earn a total of  15.00  from holding Beyond Oil or generate 17.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Gulf Island Fabrication  vs.  Beyond Oil

Gulf Island Fabrication

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Island Fabrication are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gulf Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Beyond Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gulf Island and Beyond Oil

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

The idea behind Gulf Island Fabrication and Beyond Oil 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 Global Correlations module to find global opportunities by holding instruments from different markets.