Correlation Between GomSpace Group and International Petroleum

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

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

Diversification Opportunities for GomSpace Group and International Petroleum

0.67

Correlation Coefficient

GomSpace Group  International Petroleum

Poor diversification

The 3 months correlation between GomSpace and International is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GomSpace Group AB and International Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Petroleum and GomSpace Group 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 GomSpace Group AB are associated (or correlated) with International Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Petroleum has no effect on the direction of GomSpace Group i.e., GomSpace Group and International Petroleum go up and down completely randomly.

Pair Corralation between GomSpace Group and International Petroleum

Assuming the 90 days trading horizon GomSpace Group AB is expected to generate 1.4 times more return on investment than International Petroleum. However, GomSpace Group is 1.4 times more volatile than International Petroleum. It trades about -0.04 of its potential returns per unit of risk. International Petroleum is currently generating about -0.09 per unit of risk. If you would invest  518.00  in GomSpace Group AB on September 4, 2024 and sell it today you would lose (48.00) from holding GomSpace Group AB or give up 9.27% of portfolio value over 90 days.

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

GomSpace Group AB  vs.  International Petroleum

GomSpace Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GomSpace Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

International Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GomSpace Group and International Petroleum

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

The idea behind GomSpace Group AB and International Petroleum 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.