Correlation Between G8 Education and Step One
Can any of the company-specific risk be diversified away by investing in both G8 Education and Step One 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 G8 Education and Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Step One Clothing, you can compare the effects of market volatilities on G8 Education and Step One 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 G8 Education with a short position of Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Step One.
Diversification Opportunities for G8 Education and Step One
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between GEM and Step is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing and G8 Education 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 G8 Education are associated (or correlated) with Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of G8 Education i.e., G8 Education and Step One go up and down completely randomly.
Pair Corralation between G8 Education and Step One
Assuming the 90 days trading horizon G8 Education is expected to generate 0.53 times more return on investment than Step One. However, G8 Education is 1.88 times less risky than Step One. It trades about 0.05 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.05 per unit of risk. If you would invest 132.00 in G8 Education on August 30, 2024 and sell it today you would earn a total of 2.00 from holding G8 Education or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
G8 Education vs. Step One Clothing
Performance |
| Timeline |
| G8 Education |
| Step One Clothing |
G8 Education and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Step One
The main advantage of trading using opposite G8 Education and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| G8 Education vs. Prodigy Gold NL | G8 Education vs. Enegex NL | G8 Education vs. Invex Therapeutics | G8 Education vs. Pointsbet Holdings |
| Step One vs. Readytech Holdings | Step One vs. Advanced Braking Technology | Step One vs. Macquarie Technology Group | Step One vs. Hotel Property Investments |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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