Correlation Between GULF ENERGY and TPC Power

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

Diversification Opportunities for GULF ENERGY and TPC Power

-0.83

Correlation Coefficient

GULF ENERGY  TPC Power

Pay attention - limited upside

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

Pair Corralation between GULF ENERGY and TPC Power

Assuming the 90 days trading horizon GULF ENERGY DEVELOPMENT NVDR is expected to generate 0.83 times more return on investment than TPC Power. However, GULF ENERGY DEVELOPMENT NVDR is 1.21 times less risky than TPC Power. It trades about 0.02 of its potential returns per unit of risk. TPC Power Holding is currently generating about -0.03 per unit of risk. If you would invest  5,266  in GULF ENERGY DEVELOPMENT NVDR on October 12, 2024 and sell it today you would earn a total of  459.00  from holding GULF ENERGY DEVELOPMENT NVDR or generate 8.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.41%
Values	Daily Returns

GULF ENERGY DEVELOPMENT NVDR  vs.  TPC Power Holding

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.

TPC Power Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TPC Power Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with GULF ENERGY and TPC Power

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

The idea behind GULF ENERGY DEVELOPMENT NVDR and TPC Power Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.