Correlation Between SGS SA and Gap,
Can any of the company-specific risk be diversified away by investing in both SGS SA and Gap, 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 SGS SA and Gap, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SGS SA and The Gap,, you can compare the effects of market volatilities on SGS SA and Gap, 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 SGS SA with a short position of Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGS SA and Gap,.
Diversification Opportunities for SGS SA and Gap,
Excellent diversification
The 3 months correlation between SGS and Gap, is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and SGS SA 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 SGS SA are associated (or correlated) with Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of SGS SA i.e., SGS SA and Gap, go up and down completely randomly.
Pair Corralation between SGS SA and Gap,
Assuming the 90 days horizon SGS SA is expected to generate 1.04 times less return on investment than Gap,. But when comparing it to its historical volatility, SGS SA is 1.42 times less risky than Gap,. It trades about 0.05 of its potential returns per unit of risk. The Gap, is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,134 in The Gap, on September 4, 2024 and sell it today you would earn a total of 445.00 from holding The Gap, or generate 20.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.54% |
| Values | Daily Returns |
SGS SA vs. The Gap,
Performance |
| Timeline |
| SGS SA |
| Gap, |
SGS SA and Gap, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SGS SA and Gap,
The main advantage of trading using opposite SGS SA and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGS SA position performs unexpectedly, Gap, 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 Gap, will offset losses from the drop in Gap,'s long position.| SGS SA vs. The Gap, | SGS SA vs. Jutal Offshore Oil | SGS SA vs. Molson Coors Brewing | SGS SA vs. BW Offshore Limited |
| Gap, vs. Merit Medical Systems | Gap, vs. Postal Realty Trust | Gap, vs. Cumberland Pharmaceuticals | Gap, vs. RBC Bearings Incorporated |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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