Correlation Between OLB and GSE Systems
Can any of the company-specific risk be diversified away by investing in both OLB and GSE Systems 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 OLB and GSE Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OLB Group and GSE Systems, you can compare the effects of market volatilities on OLB and GSE Systems 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 OLB with a short position of GSE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of OLB and GSE Systems.
Diversification Opportunities for OLB and GSE Systems
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OLB and GSE is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding OLB Group and GSE Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSE Systems and OLB 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 OLB Group are associated (or correlated) with GSE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSE Systems has no effect on the direction of OLB i.e., OLB and GSE Systems go up and down completely randomly.
Pair Corralation between OLB and GSE Systems
Considering the 90-day investment horizon OLB Group is expected to under-perform the GSE Systems. In addition to that, OLB is 1.18 times more volatile than GSE Systems. It trades about -0.03 of its total potential returns per unit of risk. GSE Systems is currently generating about 0.04 per unit of volatility. If you would invest 416.00 in GSE Systems on September 1, 2024 and sell it today you would earn a total of 43.00 from holding GSE Systems or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.92% |
| Values | Daily Returns |
OLB Group vs. GSE Systems
Performance |
| Timeline |
| OLB Group |
| GSE Systems |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
OLB and GSE Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OLB and GSE Systems
The main advantage of trading using opposite OLB and GSE Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OLB position performs unexpectedly, GSE Systems 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 GSE Systems will offset losses from the drop in GSE Systems' long position.The idea behind OLB Group and GSE Systems 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.| GSE Systems vs. LifeSpeak | GSE Systems vs. RenoWorks Software | GSE Systems vs. 01 Communique Laboratory | GSE Systems vs. RESAAS Services |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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