Correlation Between Lsb Industries and Gulf Resources
Can any of the company-specific risk be diversified away by investing in both Lsb Industries and Gulf Resources 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 Lsb Industries and Gulf Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsb Industries and Gulf Resources, you can compare the effects of market volatilities on Lsb Industries and Gulf Resources 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 Lsb Industries with a short position of Gulf Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsb Industries and Gulf Resources.
Diversification Opportunities for Lsb Industries and Gulf Resources
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lsb and Gulf is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and Gulf Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Resources and Lsb Industries 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 Lsb Industries are associated (or correlated) with Gulf Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Resources has no effect on the direction of Lsb Industries i.e., Lsb Industries and Gulf Resources go up and down completely randomly.
Pair Corralation between Lsb Industries and Gulf Resources
Considering the 90-day investment horizon Lsb Industries is expected to under-perform the Gulf Resources. But the stock apears to be less risky and, when comparing its historical volatility, Lsb Industries is 1.75 times less risky than Gulf Resources. The stock trades about -0.08 of its potential returns per unit of risk. The Gulf Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Gulf Resources on December 1, 2024 and sell it today you would earn a total of 18.00 from holding Gulf Resources or generate 33.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lsb Industries vs. Gulf Resources
Performance |
Timeline |
Lsb Industries |
Gulf Resources |
Lsb Industries and Gulf Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lsb Industries and Gulf Resources
The main advantage of trading using opposite Lsb Industries and Gulf Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsb Industries position performs unexpectedly, Gulf Resources 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 Resources will offset losses from the drop in Gulf Resources' long position.Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries vs. Methanex |
Gulf Resources vs. Energy and Environmental | Gulf Resources vs. Alumifuel Pwr Corp | Gulf Resources vs. First Graphene | Gulf Resources vs. ASP Isotopes Common |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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