Correlation Between Gulf Energy and Ekarat Engineering

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

By analyzing existing cross correlation between Gulf Energy Development and Ekarat Engineering Public, you can compare the effects of market volatilities on Gulf Energy and Ekarat Engineering 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 Ekarat Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Energy and Ekarat Engineering.

Diversification Opportunities for Gulf Energy and Ekarat Engineering

-0.58

Correlation Coefficient

Gulf Energy  Ekarat Engineering

Excellent diversification

The 3 months correlation between Gulf and Ekarat is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and Ekarat Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekarat Engineering 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 are associated (or correlated) with Ekarat Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekarat Engineering Public has no effect on the direction of Gulf Energy i.e., Gulf Energy and Ekarat Engineering go up and down completely randomly.

Pair Corralation between Gulf Energy and Ekarat Engineering

Assuming the 90 days trading horizon Gulf Energy Development is expected to under-perform the Ekarat Engineering. In addition to that, Gulf Energy is 2.09 times more volatile than Ekarat Engineering Public. It trades about -0.1 of its total potential returns per unit of risk. Ekarat Engineering Public is currently generating about -0.01 per unit of volatility. If you would invest  102.00  in Ekarat Engineering Public on December 29, 2024 and sell it today you would lose (1.00) from holding Ekarat Engineering Public or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Gulf Energy Development  vs.  Ekarat Engineering Public

Gulf Energy Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gulf Energy Development 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ekarat Engineering Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ekarat Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Ekarat Engineering is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gulf Energy and Ekarat Engineering

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

The idea behind Gulf Energy Development and Ekarat Engineering 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.