Correlation Between Intl Star and Texas Gulf

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

By analyzing existing cross correlation between Intl Star and Texas Gulf Energy, you can compare the effects of market volatilities on Intl Star and Texas Gulf 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 Intl Star with a short position of Texas Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intl Star and Texas Gulf.

Diversification Opportunities for Intl Star and Texas Gulf

-0.14

Correlation Coefficient

Intl Star  Texas Gulf

Good diversification

The 3 months correlation between Intl and Texas is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Intl Star and Texas Gulf Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Gulf Energy and Intl Star 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 Intl Star are associated (or correlated) with Texas Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Gulf Energy has no effect on the direction of Intl Star i.e., Intl Star and Texas Gulf go up and down completely randomly.

Pair Corralation between Intl Star and Texas Gulf

Given the investment horizon of 90 days Intl Star is expected to under-perform the Texas Gulf. In addition to that, Intl Star is 4.53 times more volatile than Texas Gulf Energy. It trades about 0.0 of its total potential returns per unit of risk. Texas Gulf Energy is currently generating about 0.18 per unit of volatility. If you would invest  263,684  in Texas Gulf Energy on December 17, 2024 and sell it today you would earn a total of  59,244  from holding Texas Gulf Energy or generate 22.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Intl Star  vs.  Texas Gulf Energy

Intl Star

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intl Star has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Intl Star is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Texas Gulf Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Gulf Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Texas Gulf exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intl Star and Texas Gulf

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

The idea behind Intl Star and Texas Gulf Energy 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.