Correlation Between GD Entertainment and Carriage Services

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

By analyzing existing cross correlation between GD Entertainment Technology and Carriage Services, you can compare the effects of market volatilities on GD Entertainment and Carriage Services 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 GD Entertainment with a short position of Carriage Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of GD Entertainment and Carriage Services.

Diversification Opportunities for GD Entertainment and Carriage Services

0.5

Correlation Coefficient

GD Entertainment  Carriage Services

Very weak diversification

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

Pair Corralation between GD Entertainment and Carriage Services

If you would invest  0.01  in GD Entertainment Technology on September 12, 2024 and sell it today you would earn a total of  0.00  from holding GD Entertainment Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

GD Entertainment Technology  vs.  Carriage Services

GD Entertainment Tec

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GD Entertainment Technology are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, GD Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Carriage Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carriage Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Carriage Services showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GD Entertainment and Carriage Services

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

The idea behind GD Entertainment Technology and Carriage Services 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.