Correlation Between GLG LIFE and Cummins
Can any of the company-specific risk be diversified away by investing in both GLG LIFE and Cummins 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 Cummins 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 Cummins, you can compare the effects of market volatilities on GLG LIFE and Cummins 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 Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and Cummins.
Diversification Opportunities for GLG LIFE and Cummins
Pay attention - limited upside
The 3 months correlation between GLG and Cummins is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins 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 Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of GLG LIFE i.e., GLG LIFE and Cummins go up and down completely randomly.
Pair Corralation between GLG LIFE and Cummins
If you would invest 34,475 in Cummins on September 14, 2024 and sell it today you would earn a total of 1,335 from holding Cummins or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GLG LIFE TECH vs. Cummins
Performance |
| Timeline |
| GLG LIFE TECH |
| Cummins |
GLG LIFE and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLG LIFE and Cummins
The main advantage of trading using opposite GLG LIFE and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.The idea behind GLG LIFE TECH and Cummins 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.| Cummins vs. BlueScope Steel Limited | Cummins vs. GLG LIFE TECH | Cummins vs. Playtech plc | Cummins vs. SOFI TECHNOLOGIES |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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