Correlation Between Minor International and Gulf Energy

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

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

Diversification Opportunities for Minor International and Gulf Energy

-0.21

Correlation Coefficient

Minor International  Gulf Energy

Very good diversification

The 3 months correlation between Minor and Gulf is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Minor International 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 Minor International 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 Minor International 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 Minor International i.e., Minor International and Gulf Energy go up and down completely randomly.

Pair Corralation between Minor International and Gulf Energy

Assuming the 90 days trading horizon Minor International Public is expected to generate 0.72 times more return on investment than Gulf Energy. However, Minor International Public is 1.4 times less risky than Gulf Energy. It trades about 0.08 of its potential returns per unit of risk. Gulf Energy Development is currently generating about -0.14 per unit of risk. If you would invest  2,700  in Minor International Public on December 2, 2024 and sell it today you would earn a total of  200.00  from holding Minor International Public or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Minor International Public  vs.  Gulf Energy Development

Minor International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Minor International Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Minor International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Minor International and Gulf Energy

The main advantage of trading using opposite Minor International and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minor International 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 Minor International 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.