Correlation Between GPT Healthcare and Teamlease Services

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

By analyzing existing cross correlation between GPT Healthcare and Teamlease Services Limited, you can compare the effects of market volatilities on GPT Healthcare and Teamlease Services 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 GPT Healthcare with a short position of Teamlease Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPT Healthcare and Teamlease Services.

Diversification Opportunities for GPT Healthcare and Teamlease Services

0.78

Correlation Coefficient

GPT Healthcare  Teamlease Services

Poor diversification

The 3 months correlation between GPT and Teamlease is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GPT Healthcare and Teamlease Services Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teamlease Services and GPT Healthcare 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 GPT Healthcare are associated (or correlated) with Teamlease Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teamlease Services has no effect on the direction of GPT Healthcare i.e., GPT Healthcare and Teamlease Services go up and down completely randomly.

Pair Corralation between GPT Healthcare and Teamlease Services

Assuming the 90 days trading horizon GPT Healthcare is expected to generate 1.02 times less return on investment than Teamlease Services. But when comparing it to its historical volatility, GPT Healthcare is 1.25 times less risky than Teamlease Services. It trades about 0.17 of its potential returns per unit of risk. Teamlease Services Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  269,965  in Teamlease Services Limited on September 4, 2024 and sell it today you would earn a total of  16,260  from holding Teamlease Services Limited or generate 6.02% return on investment over 90 days.

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

GPT Healthcare  vs.  Teamlease Services Limited

GPT Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Teamlease Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teamlease Services Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GPT Healthcare and Teamlease Services

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

The idea behind GPT Healthcare and Teamlease Services Limited 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.