Correlation Between Gulf Energy and Thai Union

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

Diversification Opportunities for Gulf Energy and Thai Union

0.2

Correlation Coefficient

Gulf Energy  Thai Union

Modest diversification

The 3 months correlation between Gulf and Thai is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Energy Development and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group 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 Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of Gulf Energy i.e., Gulf Energy and Thai Union go up and down completely randomly.

Pair Corralation between Gulf Energy and Thai Union

Assuming the 90 days trading horizon Gulf Energy Development is expected to generate 1.14 times more return on investment than Thai Union. However, Gulf Energy is 1.14 times more volatile than Thai Union Group. It trades about -0.1 of its potential returns per unit of risk. Thai Union Group is currently generating about -0.18 per unit of risk. If you would invest  6,275  in Gulf Energy Development on September 27, 2024 and sell it today you would lose (300.00) from holding Gulf Energy Development or give up 4.78% of portfolio value over 90 days.

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

Gulf Energy Development  vs.  Thai Union Group

Gulf Energy Development

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Energy Development are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Gulf Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thai Union Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Union Group 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 fundamental drivers remain quite persistent which may send shares a bit higher in January 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 Thai Union

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

The idea behind Gulf Energy Development and Thai Union Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.