Correlation Between GP Global and Priortech

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

Diversification Opportunities for GP Global and Priortech

0.0

Correlation Coefficient

GP Global  Priortech

Pay attention - limited upside

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

Pair Corralation between GP Global and Priortech

Assuming the 90 days trading horizon GP Global is expected to generate 11.49 times less return on investment than Priortech. But when comparing it to its historical volatility, GP Global Power is 1.76 times less risky than Priortech. It trades about 0.02 of its potential returns per unit of risk. Priortech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  660,000  in Priortech on September 27, 2024 and sell it today you would earn a total of  1,082,000  from holding Priortech or generate 163.94% 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.  Priortech

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.

Priortech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Priortech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Priortech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GP Global and Priortech

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

The idea behind GP Global Power and Priortech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.