Correlation Between Carabao Group and GFPT Public
Can any of the company-specific risk be diversified away by investing in both Carabao Group and GFPT Public 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 Carabao Group and GFPT Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carabao Group Public and GFPT Public, you can compare the effects of market volatilities on Carabao Group and GFPT Public 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 Carabao Group with a short position of GFPT Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carabao Group and GFPT Public.
Diversification Opportunities for Carabao Group and GFPT Public
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Carabao and GFPT is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Carabao Group Public and GFPT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFPT Public and Carabao Group 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 Carabao Group Public are associated (or correlated) with GFPT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFPT Public has no effect on the direction of Carabao Group i.e., Carabao Group and GFPT Public go up and down completely randomly.
Pair Corralation between Carabao Group and GFPT Public
Assuming the 90 days trading horizon Carabao Group Public is expected to generate 1.47 times more return on investment than GFPT Public. However, Carabao Group is 1.47 times more volatile than GFPT Public. It trades about 0.0 of its potential returns per unit of risk. GFPT Public is currently generating about -0.16 per unit of risk. If you would invest 7,925 in Carabao Group Public on August 28, 2024 and sell it today you would lose (25.00) from holding Carabao Group Public or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carabao Group Public vs. GFPT Public
Performance |
| Timeline |
| Carabao Group Public |
| GFPT Public |
Carabao Group and GFPT Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carabao Group and GFPT Public
The main advantage of trading using opposite Carabao Group and GFPT Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carabao Group position performs unexpectedly, GFPT Public 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 GFPT Public will offset losses from the drop in GFPT Public's long position.The idea behind Carabao Group Public and GFPT Public 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.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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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