Correlation Between GFPT Public and Sappe Public

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

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

Diversification Opportunities for GFPT Public and Sappe Public

-0.36

Correlation Coefficient

GFPT Public  Sappe Public

Very good diversification

The 3 months correlation between GFPT and Sappe is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GFPT Public and Sappe Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sappe Public and GFPT Public 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 GFPT Public are associated (or correlated) with Sappe Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sappe Public has no effect on the direction of GFPT Public i.e., GFPT Public and Sappe Public go up and down completely randomly.

Pair Corralation between GFPT Public and Sappe Public

Assuming the 90 days trading horizon GFPT Public is expected to under-perform the Sappe Public. But the stock apears to be less risky and, when comparing its historical volatility, GFPT Public is 1.81 times less risky than Sappe Public. The stock trades about -0.22 of its potential returns per unit of risk. The Sappe Public is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,200  in Sappe Public on September 23, 2024 and sell it today you would lose (500.00) from holding Sappe Public or give up 6.94% of portfolio value over 90 days.

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

GFPT Public  vs.  Sappe Public

GFPT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GFPT Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sappe Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sappe Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Sappe Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GFPT Public and Sappe Public

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

The idea behind GFPT Public and Sappe Public 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.