Correlation Between GCL Poly and SunHydrogen

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

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

Diversification Opportunities for GCL Poly and SunHydrogen

-0.47

Correlation Coefficient

GCL Poly  SunHydrogen

Very good diversification

The 3 months correlation between GCL and SunHydrogen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding GCL Poly Energy Holdings and SunHydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunHydrogen and GCL Poly 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 GCL Poly Energy Holdings are associated (or correlated) with SunHydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunHydrogen has no effect on the direction of GCL Poly i.e., GCL Poly and SunHydrogen go up and down completely randomly.

Pair Corralation between GCL Poly and SunHydrogen

Assuming the 90 days horizon GCL Poly Energy Holdings is expected to generate 1.17 times more return on investment than SunHydrogen. However, GCL Poly is 1.17 times more volatile than SunHydrogen. It trades about 0.06 of its potential returns per unit of risk. SunHydrogen is currently generating about 0.06 per unit of risk. If you would invest  12.00  in GCL Poly Energy Holdings on September 2, 2024 and sell it today you would earn a total of  6.00  from holding GCL Poly Energy Holdings or generate 50.0% return on investment over 90 days.

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

GCL Poly Energy Holdings  vs.  SunHydrogen

GCL Poly Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCL Poly Energy Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, GCL Poly reported solid returns over the last few months and may actually be approaching a breakup point.

SunHydrogen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SunHydrogen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, SunHydrogen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GCL Poly and SunHydrogen

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

The idea behind GCL Poly Energy Holdings and SunHydrogen 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.