Correlation Between Gulf Resources and Granite Falls

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

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

Diversification Opportunities for Gulf Resources and Granite Falls

-0.43

Correlation Coefficient

Gulf Resources  Granite Falls

Very good diversification

The 3 months correlation between Gulf and Granite is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Resources and Granite Falls Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Falls Energy and Gulf Resources 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 Gulf Resources are associated (or correlated) with Granite Falls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Falls Energy has no effect on the direction of Gulf Resources i.e., Gulf Resources and Granite Falls go up and down completely randomly.

Pair Corralation between Gulf Resources and Granite Falls

Given the investment horizon of 90 days Gulf Resources is expected to generate 21.19 times more return on investment than Granite Falls. However, Gulf Resources is 21.19 times more volatile than Granite Falls Energy. It trades about 0.09 of its potential returns per unit of risk. Granite Falls Energy is currently generating about -0.22 per unit of risk. If you would invest  150.00  in Gulf Resources on March 14, 2024 and sell it today you would earn a total of  8.00  from holding Gulf Resources or generate 5.33% return on investment over 90 days.

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

Gulf Resources  vs.  Granite Falls Energy

Gulf Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Gulf Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Granite Falls Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Granite Falls Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Granite Falls is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gulf Resources and Granite Falls

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

The idea behind Gulf Resources and Granite Falls 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.