Correlation Between GP Global and Carmit

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

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

Diversification Opportunities for GP Global and Carmit

0.0

Correlation Coefficient

GP Global  Carmit

Pay attention - limited upside

The 3 months correlation between GPGB and Carmit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GP Global Power and Carmit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmit and GP Global 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 GP Global Power are associated (or correlated) with Carmit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmit has no effect on the direction of GP Global i.e., GP Global and Carmit go up and down completely randomly.

Pair Corralation between GP Global and Carmit

If you would invest  117,100  in Carmit on September 24, 2024 and sell it today you would lose (600.00) from holding Carmit or give up 0.51% of portfolio value over 90 days.

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

GP Global Power  vs.  Carmit

GP Global Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GP Global Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GP Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carmit

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GP Global and Carmit

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

The idea behind GP Global Power and Carmit 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 Stocks Directory module to find actively traded stocks across global markets.