Correlation Between Rose Hill and Gulf Island

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

By analyzing existing cross correlation between Rose Hill Acquisition and Gulf Island Fabrication, you can compare the effects of market volatilities on Rose Hill and Gulf Island 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 Rose Hill with a short position of Gulf Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rose Hill and Gulf Island.

Diversification Opportunities for Rose Hill and Gulf Island

0.0

Correlation Coefficient

Rose Hill  Gulf Island

Pay attention - limited upside

The 3 months correlation between Rose and Gulf is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rose Hill Acquisition and Gulf Island Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Island Fabrication and Rose Hill 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 Rose Hill Acquisition are associated (or correlated) with Gulf Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Island Fabrication has no effect on the direction of Rose Hill i.e., Rose Hill and Gulf Island go up and down completely randomly.

Pair Corralation between Rose Hill and Gulf Island

If you would invest (100.00) in Rose Hill Acquisition on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Rose Hill Acquisition or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Rose Hill Acquisition  vs.  Gulf Island Fabrication

Rose Hill Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rose Hill Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rose Hill is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Gulf Island Fabrication

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gulf Island Fabrication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Gulf Island is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Rose Hill and Gulf Island

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

The idea behind Rose Hill Acquisition and Gulf Island Fabrication 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.