Correlation Between GP Investments and CM Hospitalar
Can any of the company-specific risk be diversified away by investing in both GP Investments and CM Hospitalar 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 GP Investments and CM Hospitalar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and CM Hospitalar SA, you can compare the effects of market volatilities on GP Investments and CM Hospitalar 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 GP Investments with a short position of CM Hospitalar. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and CM Hospitalar.
Diversification Opportunities for GP Investments and CM Hospitalar
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between GPIV33 and VVEO3 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and CM Hospitalar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM Hospitalar SA and GP Investments 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 GP Investments are associated (or correlated) with CM Hospitalar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM Hospitalar SA has no effect on the direction of GP Investments i.e., GP Investments and CM Hospitalar go up and down completely randomly.
Pair Corralation between GP Investments and CM Hospitalar
Assuming the 90 days trading horizon GP Investments is expected to generate 1.89 times less return on investment than CM Hospitalar. But when comparing it to its historical volatility, GP Investments is 2.18 times less risky than CM Hospitalar. It trades about 0.07 of its potential returns per unit of risk. CM Hospitalar SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 197.00 in CM Hospitalar SA on August 30, 2024 and sell it today you would earn a total of 7.00 from holding CM Hospitalar SA or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
GP Investments vs. CM Hospitalar SA
Performance |
| Timeline |
| GP Investments |
| CM Hospitalar SA |
GP Investments and CM Hospitalar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and CM Hospitalar
The main advantage of trading using opposite GP Investments and CM Hospitalar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments position performs unexpectedly, CM Hospitalar 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 CM Hospitalar will offset losses from the drop in CM Hospitalar's long position.| GP Investments vs. Ross Stores | GP Investments vs. Paycom Software | GP Investments vs. MAHLE Metal Leve | GP Investments vs. Bio Techne |
| CM Hospitalar vs. Unity Software | CM Hospitalar vs. MAHLE Metal Leve | CM Hospitalar vs. Spotify Technology SA | CM Hospitalar vs. Monster Beverage |
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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