Correlation Between GULF ENERGY and Smart Concrete

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

By analyzing existing cross correlation between GULF ENERGY DEVELOPMENT NVDR and Smart Concrete Public, you can compare the effects of market volatilities on GULF ENERGY and Smart Concrete 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 ENERGY with a short position of Smart Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of GULF ENERGY and Smart Concrete.

Diversification Opportunities for GULF ENERGY and Smart Concrete

0.16

Correlation Coefficient

GULF ENERGY  Smart Concrete

Average diversification

The 3 months correlation between GULF and Smart is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GULF ENERGY DEVELOPMENT NVDR and Smart Concrete Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Concrete Public and GULF ENERGY 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 ENERGY DEVELOPMENT NVDR are associated (or correlated) with Smart Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Concrete Public has no effect on the direction of GULF ENERGY i.e., GULF ENERGY and Smart Concrete go up and down completely randomly.

Pair Corralation between GULF ENERGY and Smart Concrete

Assuming the 90 days trading horizon GULF ENERGY DEVELOPMENT NVDR is expected to under-perform the Smart Concrete. But the stock apears to be less risky and, when comparing its historical volatility, GULF ENERGY DEVELOPMENT NVDR is 1.03 times less risky than Smart Concrete. The stock trades about -0.13 of its potential returns per unit of risk. The Smart Concrete Public is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Smart Concrete Public on December 11, 2024 and sell it today you would lose (12.00) from holding Smart Concrete Public or give up 15.79% of portfolio value over 90 days.

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

GULF ENERGY DEVELOPMENT NVDR  vs.  Smart Concrete Public

GULF ENERGY DEVELOPMENT

Risk-Adjusted Performance

Very Weak

Over the last 90 days GULF ENERGY DEVELOPMENT NVDR 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Smart Concrete Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smart Concrete Public 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 fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GULF ENERGY and Smart Concrete

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

The idea behind GULF ENERGY DEVELOPMENT NVDR and Smart Concrete Public 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .