Correlation Between GP Global and Eldav L

Can any of the company-specific risk be diversified away by investing in both GP Global and Eldav L 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 Eldav L 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 Eldav L, you can compare the effects of market volatilities on GP Global and Eldav L 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 Eldav L. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Global and Eldav L.

Diversification Opportunities for GP Global and Eldav L

0.0

Correlation Coefficient

GP Global  Eldav L

Pay attention - limited upside

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

Pair Corralation between GP Global and Eldav L

Assuming the 90 days trading horizon GP Global is expected to generate 1.98 times less return on investment than Eldav L. But when comparing it to its historical volatility, GP Global Power is 1.68 times less risky than Eldav L. It trades about 0.02 of its potential returns per unit of risk. Eldav L is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  25,228  in Eldav L on September 27, 2024 and sell it today you would earn a total of  1,192  from holding Eldav L or generate 4.72% return on investment over 90 days.

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

GP Global Power  vs.  Eldav L

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.

Eldav L

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eldav L are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eldav L unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GP Global and Eldav L

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

The idea behind GP Global Power and Eldav L 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.