Correlation Between Gfinity PLC and London Security
Can any of the company-specific risk be diversified away by investing in both Gfinity PLC and London Security 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 Gfinity PLC and London Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gfinity PLC and London Security Plc, you can compare the effects of market volatilities on Gfinity PLC and London Security 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 Gfinity PLC with a short position of London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfinity PLC and London Security.
Diversification Opportunities for Gfinity PLC and London Security
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gfinity and London is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gfinity PLC and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security Plc and Gfinity PLC 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 Gfinity PLC are associated (or correlated) with London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of Gfinity PLC i.e., Gfinity PLC and London Security go up and down completely randomly.
Pair Corralation between Gfinity PLC and London Security
Assuming the 90 days trading horizon Gfinity PLC is expected to generate 18.14 times more return on investment than London Security. However, Gfinity PLC is 18.14 times more volatile than London Security Plc. It trades about 0.28 of its potential returns per unit of risk. London Security Plc is currently generating about 0.22 per unit of risk. If you would invest 2.50 in Gfinity PLC on September 24, 2024 and sell it today you would earn a total of 3.00 from holding Gfinity PLC or generate 120.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gfinity PLC vs. London Security Plc
Performance |
| Timeline |
| Gfinity PLC |
| London Security Plc |
Gfinity PLC and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gfinity PLC and London Security
The main advantage of trading using opposite Gfinity PLC and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gfinity PLC position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security's long position.| Gfinity PLC vs. Synthomer plc | Gfinity PLC vs. Trainline Plc | Gfinity PLC vs. Fresenius Medical Care | Gfinity PLC vs. DFS Furniture PLC |
| London Security vs. Tungsten West PLC | London Security vs. Argo Group Limited | London Security vs. Hardide PLC | London Security vs. Gfinity 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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