Correlation Between Golden Energy and El Pollo

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

By analyzing existing cross correlation between Golden Energy Offshore and El Pollo Loco, you can compare the effects of market volatilities on Golden Energy and El Pollo 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 Golden Energy with a short position of El Pollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Energy and El Pollo.

Diversification Opportunities for Golden Energy and El Pollo

0.65

Correlation Coefficient

Golden Energy  El Pollo

Poor diversification

The 3 months correlation between Golden and LOCO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Golden Energy Offshore and El Pollo Loco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Pollo Loco and Golden Energy 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 Golden Energy Offshore are associated (or correlated) with El Pollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Pollo Loco has no effect on the direction of Golden Energy i.e., Golden Energy and El Pollo go up and down completely randomly.

Pair Corralation between Golden Energy and El Pollo

Assuming the 90 days horizon Golden Energy is expected to generate 2.81 times less return on investment than El Pollo. But when comparing it to its historical volatility, Golden Energy Offshore is 3.06 times less risky than El Pollo. It trades about 0.13 of its potential returns per unit of risk. El Pollo Loco is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  897.00  in El Pollo Loco on May 6, 2025 and sell it today you would earn a total of  148.00  from holding El Pollo Loco or generate 16.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Golden Energy Offshore  vs.  El Pollo Loco

Golden Energy Offshore

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Energy Offshore are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Golden Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

El Pollo Loco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in El Pollo Loco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, El Pollo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Energy and El Pollo

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

The idea behind Golden Energy Offshore and El Pollo Loco 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.