Correlation Between Fair Oaks and GSTechnologies
Can any of the company-specific risk be diversified away by investing in both Fair Oaks and GSTechnologies 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 Fair Oaks and GSTechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and GSTechnologies, you can compare the effects of market volatilities on Fair Oaks and GSTechnologies 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 Fair Oaks with a short position of GSTechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and GSTechnologies.
Diversification Opportunities for Fair Oaks and GSTechnologies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fair and GSTechnologies is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and GSTechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSTechnologies and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with GSTechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSTechnologies has no effect on the direction of Fair Oaks i.e., Fair Oaks and GSTechnologies go up and down completely randomly.
Pair Corralation between Fair Oaks and GSTechnologies
Assuming the 90 days trading horizon Fair Oaks is expected to generate 5.34 times less return on investment than GSTechnologies. But when comparing it to its historical volatility, Fair Oaks Income is 12.16 times less risky than GSTechnologies. It trades about 0.13 of its potential returns per unit of risk. GSTechnologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 127.00 in GSTechnologies on September 25, 2024 and sell it today you would earn a total of 63.00 from holding GSTechnologies or generate 49.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fair Oaks Income vs. GSTechnologies
Performance |
| Timeline |
| Fair Oaks Income |
| GSTechnologies |
Fair Oaks and GSTechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and GSTechnologies
The main advantage of trading using opposite Fair Oaks and GSTechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks position performs unexpectedly, GSTechnologies 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 GSTechnologies will offset losses from the drop in GSTechnologies' long position.| Fair Oaks vs. Roper Technologies | Fair Oaks vs. Cairn Homes PLC | Fair Oaks vs. Ashtead Technology Holdings | Fair Oaks vs. bet at home AG |
| GSTechnologies vs. Ion Beam Applications | GSTechnologies vs. Amedeo Air Four | GSTechnologies vs. Fair Oaks Income | GSTechnologies vs. LBG Media PLC |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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