Correlation Between Gap, and Raytech Holding

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

By analyzing existing cross correlation between The Gap, and Raytech Holding Limited, you can compare the effects of market volatilities on Gap, and Raytech Holding 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 Gap, with a short position of Raytech Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Raytech Holding.

Diversification Opportunities for Gap, and Raytech Holding

-0.5

Correlation Coefficient

Gap,  Raytech Holding

Very good diversification

The 3 months correlation between Gap, and Raytech is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Raytech Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytech Holding and Gap, 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 The Gap, are associated (or correlated) with Raytech Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytech Holding has no effect on the direction of Gap, i.e., Gap, and Raytech Holding go up and down completely randomly.

Pair Corralation between Gap, and Raytech Holding

Considering the 90-day investment horizon The Gap, is expected to generate 0.7 times more return on investment than Raytech Holding. However, The Gap, is 1.43 times less risky than Raytech Holding. It trades about 0.22 of its potential returns per unit of risk. Raytech Holding Limited is currently generating about -0.03 per unit of risk. If you would invest  2,074  in The Gap, on September 2, 2024 and sell it today you would earn a total of  351.00  from holding The Gap, or generate 16.92% return on investment over 90 days.

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

The Gap,  vs.  Raytech Holding Limited

Gap,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Gap, may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Raytech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Gap, and Raytech Holding

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

The idea behind The Gap, and Raytech Holding Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.