Correlation Between AP Public and Gunkul Engineering

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

By analyzing existing cross correlation between AP Public and Gunkul Engineering Public, you can compare the effects of market volatilities on AP Public and Gunkul Engineering 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 AP Public with a short position of Gunkul Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Public and Gunkul Engineering.

Diversification Opportunities for AP Public and Gunkul Engineering

0.94

Correlation Coefficient

AP Public  Gunkul Engineering

Almost no diversification

The 3 months correlation between AP Public and Gunkul is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding AP Public and Gunkul Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunkul Engineering Public and AP Public 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 AP Public are associated (or correlated) with Gunkul Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunkul Engineering Public has no effect on the direction of AP Public i.e., AP Public and Gunkul Engineering go up and down completely randomly.

Pair Corralation between AP Public and Gunkul Engineering

Assuming the 90 days horizon AP Public is expected to under-perform the Gunkul Engineering. But the stock apears to be less risky and, when comparing its historical volatility, AP Public is 1.4 times less risky than Gunkul Engineering. The stock trades about -0.03 of its potential returns per unit of risk. The Gunkul Engineering Public is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  245.00  in Gunkul Engineering Public on September 5, 2024 and sell it today you would lose (9.00) from holding Gunkul Engineering Public or give up 3.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AP Public  vs.  Gunkul Engineering Public

AP Public

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days AP Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, AP Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Gunkul Engineering Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunkul Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gunkul Engineering is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AP Public and Gunkul Engineering

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

The idea behind AP Public and Gunkul Engineering Public 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.