Correlation Between Gulf Energy and Humanica Public

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

Diversification Opportunities for Gulf Energy and Humanica Public

-0.89

Correlation Coefficient

Gulf Energy  Humanica Public

Pay attention - limited upside

The 3 months correlation between Gulf and Humanica is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and Humanica Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humanica 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 Humanica Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humanica Public has no effect on the direction of Gulf Energy i.e., Gulf Energy and Humanica Public go up and down completely randomly.

Pair Corralation between Gulf Energy and Humanica Public

Assuming the 90 days trading horizon Gulf Energy Development is expected to under-perform the Humanica Public. But the stock apears to be less risky and, when comparing its historical volatility, Gulf Energy Development is 1.1 times less risky than Humanica Public. The stock trades about -0.1 of its potential returns per unit of risk. The Humanica Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  840.00  in Humanica Public on December 30, 2024 and sell it today you would lose (35.00) from holding Humanica Public or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.48%
Values	Daily Returns

Gulf Energy Development  vs.  Humanica 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.

Humanica Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humanica Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Humanica Public is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gulf Energy and Humanica Public

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

The idea behind Gulf Energy Development and Humanica 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.