Correlation Between Covivio SA and GPT

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

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

Diversification Opportunities for Covivio SA and GPT

0.81

Correlation Coefficient

Covivio SA  GPT

Very poor diversification

The 3 months correlation between Covivio and GPT is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Covivio SA and GPT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Group and Covivio 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 Covivio SA are associated (or correlated) with GPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Group has no effect on the direction of Covivio SA i.e., Covivio SA and GPT go up and down completely randomly.

Pair Corralation between Covivio SA and GPT

Assuming the 90 days horizon Covivio SA is expected to under-perform the GPT. But the stock apears to be less risky and, when comparing its historical volatility, Covivio SA is 1.51 times less risky than GPT. The stock trades about -0.16 of its potential returns per unit of risk. The GPT Group is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  298.00  in GPT Group on September 23, 2024 and sell it today you would lose (33.00) from holding GPT Group or give up 11.07% of portfolio value over 90 days.

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

Covivio SA  vs.  GPT Group

Covivio SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covivio SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Covivio SA and GPT

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

The idea behind Covivio SA and GPT Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.