Correlation Between Direct Communication and GBT Technologies

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

By analyzing existing cross correlation between Direct Communication Solutions and GBT Technologies, you can compare the effects of market volatilities on Direct Communication and GBT Technologies 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 Direct Communication with a short position of GBT Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Communication and GBT Technologies.

Diversification Opportunities for Direct Communication and GBT Technologies

0.52

Correlation Coefficient

Direct Communication  GBT Technologies

Very weak diversification

The 3 months correlation between Direct and GBT is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Direct Communication Solutions and GBT Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBT Technologies and Direct Communication 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 Direct Communication Solutions are associated (or correlated) with GBT Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBT Technologies has no effect on the direction of Direct Communication i.e., Direct Communication and GBT Technologies go up and down completely randomly.

Pair Corralation between Direct Communication and GBT Technologies

Given the investment horizon of 90 days Direct Communication is expected to generate 36.46 times less return on investment than GBT Technologies. But when comparing it to its historical volatility, Direct Communication Solutions is 25.44 times less risky than GBT Technologies. It trades about 0.17 of its potential returns per unit of risk. GBT Technologies is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  0.01  in GBT Technologies on September 22, 2024 and sell it today you would earn a total of  0.01  from holding GBT Technologies or generate 100.0% return on investment over 90 days.

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

Direct Communication Solutions  vs.  GBT Technologies

Direct Communication

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direct Communication Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Direct Communication showed solid returns over the last few months and may actually be approaching a breakup point.

GBT Technologies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GBT Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, GBT Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direct Communication and GBT Technologies

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

The idea behind Direct Communication Solutions and GBT Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.