Correlation Between GP Global and Wilk Technologies

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

Diversification Opportunities for GP Global and Wilk Technologies

0.0

Correlation Coefficient

GP Global  Wilk Technologies

Pay attention - limited upside

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

Pair Corralation between GP Global and Wilk Technologies

Assuming the 90 days trading horizon GP Global Power is expected to generate 0.45 times more return on investment than Wilk Technologies. However, GP Global Power is 2.23 times less risky than Wilk Technologies. It trades about 0.02 of its potential returns per unit of risk. Wilk Technologies is currently generating about -0.06 per unit of risk. If you would invest  156,200  in GP Global Power on September 27, 2024 and sell it today you would earn a total of  7,000  from holding GP Global Power or generate 4.48% 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.  Wilk Technologies

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.

Wilk Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilk Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GP Global and Wilk Technologies

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

The idea behind GP Global Power and Wilk Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.