Correlation Between GFPT Public and Asian Sea
Can any of the company-specific risk be diversified away by investing in both GFPT Public and Asian Sea 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 GFPT Public and Asian Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFPT Public and Asian Sea, you can compare the effects of market volatilities on GFPT Public and Asian Sea 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 GFPT Public with a short position of Asian Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFPT Public and Asian Sea.
Diversification Opportunities for GFPT Public and Asian Sea
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GFPT and Asian is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GFPT Public and Asian Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Sea and GFPT Public 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 GFPT Public are associated (or correlated) with Asian Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Sea has no effect on the direction of GFPT Public i.e., GFPT Public and Asian Sea go up and down completely randomly.
Pair Corralation between GFPT Public and Asian Sea
Assuming the 90 days trading horizon GFPT Public is expected to generate 1.25 times more return on investment than Asian Sea. However, GFPT Public is 1.25 times more volatile than Asian Sea. It trades about -0.16 of its potential returns per unit of risk. Asian Sea is currently generating about -0.25 per unit of risk. If you would invest 1,140 in GFPT Public on August 28, 2024 and sell it today you would lose (60.00) from holding GFPT Public or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFPT Public vs. Asian Sea
Performance |
| Timeline |
| GFPT Public |
| Asian Sea |
GFPT Public and Asian Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFPT Public and Asian Sea
The main advantage of trading using opposite GFPT Public and Asian Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFPT Public position performs unexpectedly, Asian Sea 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 Asian Sea will offset losses from the drop in Asian Sea's long position.The idea behind GFPT Public and Asian Sea 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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