Correlation Between GPT and PSI Software

Can any of the company-specific risk be diversified away by investing in both GPT and PSI Software 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 GPT and PSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GPT Group and PSI Software AG, you can compare the effects of market volatilities on GPT and PSI Software 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 GPT with a short position of PSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPT and PSI Software.

Diversification Opportunities for GPT and PSI Software

0.38

Correlation Coefficient

GPT  PSI Software

Weak diversification

The 3 months correlation between GPT and PSI is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding GPT Group and PSI Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSI Software AG and GPT 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 GPT Group are associated (or correlated) with PSI Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSI Software AG has no effect on the direction of GPT i.e., GPT and PSI Software go up and down completely randomly.

Pair Corralation between GPT and PSI Software

Assuming the 90 days horizon GPT Group is expected to under-perform the PSI Software. In addition to that, GPT is 2.03 times more volatile than PSI Software AG. It trades about 0.0 of its total potential returns per unit of risk. PSI Software AG is currently generating about 0.06 per unit of volatility. If you would invest  2,000  in PSI Software AG on September 5, 2024 and sell it today you would earn a total of  100.00  from holding PSI Software AG or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

GPT Group  vs.  PSI Software AG

GPT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GPT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PSI Software AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PSI Software AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PSI Software is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GPT and PSI Software

The main advantage of trading using opposite GPT and PSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GPT position performs unexpectedly, PSI Software 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 PSI Software will offset losses from the drop in PSI Software's long position.

The idea behind GPT Group and PSI Software AG 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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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.