Correlation Between GULF ENERGY and Sonic Interfreight

Can any of the company-specific risk be diversified away by investing in both GULF ENERGY and Sonic Interfreight 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 Sonic Interfreight 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 Sonic Interfreight Public, you can compare the effects of market volatilities on GULF ENERGY and Sonic Interfreight 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 Sonic Interfreight. Check out your portfolio center. Please also check ongoing floating volatility patterns of GULF ENERGY and Sonic Interfreight.

Diversification Opportunities for GULF ENERGY and Sonic Interfreight

0.83

Correlation Coefficient

GULF ENERGY  Sonic Interfreight

Very poor diversification

The 3 months correlation between GULF and Sonic is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GULF ENERGY DEVELOPMENT NVDR and Sonic Interfreight Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Interfreight 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 Sonic Interfreight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Interfreight Public has no effect on the direction of GULF ENERGY i.e., GULF ENERGY and Sonic Interfreight go up and down completely randomly.

Pair Corralation between GULF ENERGY and Sonic Interfreight

Assuming the 90 days trading horizon GULF ENERGY DEVELOPMENT NVDR is expected to under-perform the Sonic Interfreight. In addition to that, GULF ENERGY is 2.36 times more volatile than Sonic Interfreight Public. It trades about -0.31 of its total potential returns per unit of risk. Sonic Interfreight Public is currently generating about 0.25 per unit of volatility. If you would invest  171.00  in Sonic Interfreight Public on October 5, 2024 and sell it today you would earn a total of  5.00  from holding Sonic Interfreight Public or generate 2.92% return on investment over 90 days.

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

GULF ENERGY DEVELOPMENT NVDR  vs.  Sonic Interfreight Public

GULF ENERGY DEVELOPMENT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GULF ENERGY DEVELOPMENT NVDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, GULF ENERGY sustained solid returns over the last few months and may actually be approaching a breakup point.

Sonic Interfreight Public

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sonic Interfreight Public are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Sonic Interfreight may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GULF ENERGY and Sonic Interfreight

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

The idea behind GULF ENERGY DEVELOPMENT NVDR and Sonic Interfreight 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.