Correlation Between GTL and VIP Clothing

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Can any of the company-specific risk be diversified away by investing in both GTL and VIP Clothing 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 VIP Clothing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GTL Limited and VIP Clothing Limited, you can compare the effects of market volatilities on GTL and VIP Clothing 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 VIP Clothing. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTL and VIP Clothing.

Diversification Opportunities for GTL and VIP Clothing

0.33
  Correlation Coefficient
 GTL

Weak diversification

The 3 months correlation between GTL and VIP is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding GTL Limited and VIP Clothing Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIP Clothing 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 VIP Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIP Clothing Limited has no effect on the direction of GTL i.e., GTL and VIP Clothing go up and down completely randomly.

Pair Corralation between GTL and VIP Clothing

Assuming the 90 days trading horizon GTL Limited is expected to generate 1.53 times more return on investment than VIP Clothing. However, GTL is 1.53 times more volatile than VIP Clothing Limited. It trades about 0.04 of its potential returns per unit of risk. VIP Clothing Limited is currently generating about 0.0 per unit of risk. If you would invest  895.00  in GTL Limited on September 3, 2024 and sell it today you would earn a total of  392.00  from holding GTL Limited or generate 43.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.59%
ValuesDaily Returns

GTL Limited  vs.  VIP Clothing Limited

 Performance 
       Timeline  
GTL Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GTL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GTL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
VIP Clothing Limited 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in VIP Clothing Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, VIP Clothing is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GTL and VIP Clothing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GTL and VIP Clothing

The main advantage of trading using opposite GTL and VIP Clothing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL position performs unexpectedly, VIP Clothing 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 VIP Clothing will offset losses from the drop in VIP Clothing's long position.
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The idea behind GTL Limited and VIP Clothing Limited 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.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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