Correlation Between Gulf Keystone and Coelacanth Energy

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

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

Diversification Opportunities for Gulf Keystone and Coelacanth Energy

0.13

Correlation Coefficient

Gulf Keystone  Coelacanth Energy

Average diversification

The 3 months correlation between Gulf and Coelacanth is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Keystone Petroleum and Coelacanth Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coelacanth Energy and Gulf Keystone 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 Keystone Petroleum are associated (or correlated) with Coelacanth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coelacanth Energy has no effect on the direction of Gulf Keystone i.e., Gulf Keystone and Coelacanth Energy go up and down completely randomly.

Pair Corralation between Gulf Keystone and Coelacanth Energy

Assuming the 90 days horizon Gulf Keystone Petroleum is expected to generate 1.04 times more return on investment than Coelacanth Energy. However, Gulf Keystone is 1.04 times more volatile than Coelacanth Energy. It trades about 0.03 of its potential returns per unit of risk. Coelacanth Energy is currently generating about -0.02 per unit of risk. If you would invest  184.00  in Gulf Keystone Petroleum on October 9, 2024 and sell it today you would earn a total of  2.00  from holding Gulf Keystone Petroleum or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Gulf Keystone Petroleum  vs.  Coelacanth Energy

Gulf Keystone Petroleum

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Keystone Petroleum are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gulf Keystone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Coelacanth Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coelacanth Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Coelacanth Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gulf Keystone and Coelacanth Energy

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

The idea behind Gulf Keystone Petroleum and Coelacanth 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.