Correlation Between GTL and ITI
Can any of the company-specific risk be diversified away by investing in both GTL and ITI 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 GTL and ITI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GTL Limited and ITI Limited, you can compare the effects of market volatilities on GTL and ITI 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 GTL with a short position of ITI. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTL and ITI.
Diversification Opportunities for GTL and ITI
Average diversification
The 3 months correlation between GTL and ITI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding GTL Limited and ITI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITI Limited and GTL 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 GTL Limited are associated (or correlated) with ITI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITI Limited has no effect on the direction of GTL i.e., GTL and ITI go up and down completely randomly.
Pair Corralation between GTL and ITI
Assuming the 90 days trading horizon GTL Limited is expected to generate 1.29 times more return on investment than ITI. However, GTL is 1.29 times more volatile than ITI Limited. It trades about 0.07 of its potential returns per unit of risk. ITI Limited is currently generating about 0.01 per unit of risk. If you would invest 760.00 in GTL Limited on September 2, 2024 and sell it today you would earn a total of 527.00 from holding GTL Limited or generate 69.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GTL Limited vs. ITI Limited
Performance |
| Timeline |
| GTL Limited |
| ITI Limited |
GTL and ITI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GTL and ITI
The main advantage of trading using opposite GTL and ITI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL position performs unexpectedly, ITI 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 ITI will offset losses from the drop in ITI's long position.| GTL vs. One 97 Communications | GTL vs. Paramount Communications Limited | GTL vs. OnMobile Global Limited | GTL vs. Elin Electronics Limited |
| ITI vs. Tata Communications Limited | ITI vs. Embassy Office Parks | ITI vs. Dev Information Technology | ITI vs. Repco Home Finance |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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