Correlation Between GLG LIFE and EAT WELL
Can any of the company-specific risk be diversified away by investing in both GLG LIFE and EAT WELL 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 GLG LIFE and EAT WELL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLG LIFE TECH and EAT WELL INVESTMENT, you can compare the effects of market volatilities on GLG LIFE and EAT WELL 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 GLG LIFE with a short position of EAT WELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and EAT WELL.
Diversification Opportunities for GLG LIFE and EAT WELL
No risk reduction
The 3 months correlation between GLG and EAT is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and EAT WELL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAT WELL INVESTMENT and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with EAT WELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAT WELL INVESTMENT has no effect on the direction of GLG LIFE i.e., GLG LIFE and EAT WELL go up and down completely randomly.
Pair Corralation between GLG LIFE and EAT WELL
Assuming the 90 days trading horizon GLG LIFE TECH is expected to generate 15.36 times more return on investment than EAT WELL. However, GLG LIFE is 15.36 times more volatile than EAT WELL INVESTMENT. It trades about 0.08 of its potential returns per unit of risk. EAT WELL INVESTMENT is currently generating about 0.01 per unit of risk. If you would invest 1.25 in GLG LIFE TECH on September 1, 2024 and sell it today you would earn a total of 0.75 from holding GLG LIFE TECH or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GLG LIFE TECH vs. EAT WELL INVESTMENT
Performance |
| Timeline |
| GLG LIFE TECH |
| EAT WELL INVESTMENT |
GLG LIFE and EAT WELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLG LIFE and EAT WELL
The main advantage of trading using opposite GLG LIFE and EAT WELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, EAT WELL 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 EAT WELL will offset losses from the drop in EAT WELL's long position.The idea behind GLG LIFE TECH and EAT WELL INVESTMENT 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.| EAT WELL vs. Ameriprise Financial | EAT WELL vs. Ares Management Corp | EAT WELL vs. Superior Plus Corp | EAT WELL vs. NMI Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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