Correlation Between Metalfrio Solutions and GP Investments
Can any of the company-specific risk be diversified away by investing in both Metalfrio Solutions and GP Investments 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 Metalfrio Solutions and GP Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metalfrio Solutions SA and GP Investments, you can compare the effects of market volatilities on Metalfrio Solutions and GP Investments 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 Metalfrio Solutions with a short position of GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalfrio Solutions and GP Investments.
Diversification Opportunities for Metalfrio Solutions and GP Investments
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metalfrio and GPIV33 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Metalfrio Solutions SA and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments and Metalfrio Solutions 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 Metalfrio Solutions SA are associated (or correlated) with GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Metalfrio Solutions i.e., Metalfrio Solutions and GP Investments go up and down completely randomly.
Pair Corralation between Metalfrio Solutions and GP Investments
Assuming the 90 days trading horizon Metalfrio Solutions SA is expected to under-perform the GP Investments. But the stock apears to be less risky and, when comparing its historical volatility, Metalfrio Solutions SA is 1.53 times less risky than GP Investments. The stock trades about -0.06 of its potential returns per unit of risk. The GP Investments is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 397.00 in GP Investments on September 14, 2024 and sell it today you would earn a total of 14.00 from holding GP Investments or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalfrio Solutions SA vs. GP Investments
Performance |
| Timeline |
| Metalfrio Solutions |
| GP Investments |
Metalfrio Solutions and GP Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalfrio Solutions and GP Investments
The main advantage of trading using opposite Metalfrio Solutions and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalfrio Solutions position performs unexpectedly, GP Investments 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 GP Investments will offset losses from the drop in GP Investments' long position.| Metalfrio Solutions vs. GP Investments | Metalfrio Solutions vs. Paycom Software | Metalfrio Solutions vs. Verizon Communications | Metalfrio Solutions vs. Unifique Telecomunicaes SA |
| GP Investments vs. The Bank of | GP Investments vs. Ameriprise Financial | GP Investments vs. Banco BTG Pactual | GP Investments vs. Banco BTG Pactual |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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