Correlation Between GCS Holdings and Mayer Steel

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

By analyzing existing cross correlation between GCS Holdings and Mayer Steel Pipe, you can compare the effects of market volatilities on GCS Holdings and Mayer Steel 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 GCS Holdings with a short position of Mayer Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCS Holdings and Mayer Steel.

Diversification Opportunities for GCS Holdings and Mayer Steel

-0.35

Correlation Coefficient

GCS Holdings  Mayer Steel

Very good diversification

The 3 months correlation between GCS and Mayer is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GCS Holdings and Mayer Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayer Steel Pipe and GCS Holdings 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 GCS Holdings are associated (or correlated) with Mayer Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayer Steel Pipe has no effect on the direction of GCS Holdings i.e., GCS Holdings and Mayer Steel go up and down completely randomly.

Pair Corralation between GCS Holdings and Mayer Steel

Assuming the 90 days trading horizon GCS Holdings is expected to generate 1.9 times more return on investment than Mayer Steel. However, GCS Holdings is 1.9 times more volatile than Mayer Steel Pipe. It trades about 0.17 of its potential returns per unit of risk. Mayer Steel Pipe is currently generating about -0.01 per unit of risk. If you would invest  3,285  in GCS Holdings on September 28, 2024 and sell it today you would earn a total of  10,165  from holding GCS Holdings or generate 309.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.62%
Values	Daily Returns

GCS Holdings  vs.  Mayer Steel Pipe

GCS Holdings

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GCS Holdings are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, GCS Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Mayer Steel Pipe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayer Steel Pipe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with GCS Holdings and Mayer Steel

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

The idea behind GCS Holdings and Mayer Steel Pipe 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.