Correlation Between New Tech and GI Group
Can any of the company-specific risk be diversified away by investing in both New Tech and GI Group 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 New Tech and GI Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Tech Venture and GI Group Poland, you can compare the effects of market volatilities on New Tech and GI Group 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 New Tech with a short position of GI Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and GI Group.
Diversification Opportunities for New Tech and GI Group
Very weak diversification
The 3 months correlation between New and GIG is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture and GI Group Poland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GI Group Poland and New Tech 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 New Tech Venture are associated (or correlated) with GI Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GI Group Poland has no effect on the direction of New Tech i.e., New Tech and GI Group go up and down completely randomly.
Pair Corralation between New Tech and GI Group
Assuming the 90 days trading horizon New Tech Venture is expected to generate 2.19 times more return on investment than GI Group. However, New Tech is 2.19 times more volatile than GI Group Poland. It trades about 0.04 of its potential returns per unit of risk. GI Group Poland is currently generating about 0.02 per unit of risk. If you would invest 14.00 in New Tech Venture on December 6, 2024 and sell it today you would earn a total of 7.00 from holding New Tech Venture or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.86% |
| Values | Daily Returns |
New Tech Venture vs. GI Group Poland
Performance |
| Timeline |
| New Tech Venture |
| GI Group Poland |
New Tech and GI Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Tech and GI Group
The main advantage of trading using opposite New Tech and GI Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Tech position performs unexpectedly, GI Group 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 GI Group will offset losses from the drop in GI Group's long position.| New Tech vs. Quantum Software SA | New Tech vs. Play2Chill SA | New Tech vs. Drago entertainment SA | New Tech vs. PZ Cormay SA |
| GI Group vs. Vivid Games SA | GI Group vs. CI Games SA | GI Group vs. Ultimate Games SA | GI Group vs. Creotech Instruments SA |
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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