Correlation Between Gfinity PLC and Tungsten West

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

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

Diversification Opportunities for Gfinity PLC and Tungsten West

0.42

Correlation Coefficient

Gfinity PLC  Tungsten West

Very weak diversification

The 3 months correlation between Gfinity and Tungsten is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gfinity PLC and Tungsten West PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tungsten West PLC and Gfinity PLC 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 Gfinity PLC are associated (or correlated) with Tungsten West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tungsten West PLC has no effect on the direction of Gfinity PLC i.e., Gfinity PLC and Tungsten West go up and down completely randomly.

Pair Corralation between Gfinity PLC and Tungsten West

Assuming the 90 days trading horizon Gfinity PLC is expected to generate 1.71 times more return on investment than Tungsten West. However, Gfinity PLC is 1.71 times more volatile than Tungsten West PLC. It trades about 0.14 of its potential returns per unit of risk. Tungsten West PLC is currently generating about 0.03 per unit of risk. If you would invest  1.90  in Gfinity PLC on September 13, 2024 and sell it today you would earn a total of  2.10  from holding Gfinity PLC or generate 110.53% return on investment over 90 days.

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

Gfinity PLC  vs.  Tungsten West PLC

Gfinity PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gfinity PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gfinity PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tungsten West PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tungsten West PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tungsten West exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gfinity PLC and Tungsten West

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

The idea behind Gfinity PLC and Tungsten West PLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.