Correlation Between Kerry Express and Gulf Energy

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

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

Diversification Opportunities for Kerry Express and Gulf Energy

0.25

Correlation Coefficient

Kerry Express  Gulf Energy

Modest diversification

The 3 months correlation between Kerry and Gulf is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Express Public and Gulf Energy Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Energy Development and Kerry Express 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 Kerry Express Public are associated (or correlated) with Gulf Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Energy Development has no effect on the direction of Kerry Express i.e., Kerry Express and Gulf Energy go up and down completely randomly.

Pair Corralation between Kerry Express and Gulf Energy

Assuming the 90 days trading horizon Kerry Express Public is expected to under-perform the Gulf Energy. In addition to that, Kerry Express is 2.18 times more volatile than Gulf Energy Development. It trades about -0.12 of its total potential returns per unit of risk. Gulf Energy Development is currently generating about 0.02 per unit of volatility. If you would invest  5,233  in Gulf Energy Development on October 11, 2024 and sell it today you would earn a total of  567.00  from holding Gulf Energy Development or generate 10.84% return on investment over 90 days.

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

Kerry Express Public  vs.  Gulf Energy Development

Kerry Express Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kerry Express Public 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 basic indicators 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.

Gulf Energy Development

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kerry Express and Gulf Energy

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

The idea behind Kerry Express Public and Gulf Energy Development 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.