Correlation Between Global Payment and Granite City

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

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

Diversification Opportunities for Global Payment and Granite City

1.0

Correlation Coefficient

Global Payment  Granite City

No risk reduction

The 3 months correlation between Global and Granite is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Payment Technologies and Granite City Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite City Food and Global Payment 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 Global Payment Technologies are associated (or correlated) with Granite City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite City Food has no effect on the direction of Global Payment i.e., Global Payment and Granite City go up and down completely randomly.

Pair Corralation between Global Payment and Granite City

If you would invest  0.01  in Granite City Food on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Granite City Food or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	1.56%
Values	Daily Returns

Global Payment Technologies  vs.  Granite City Food

Global Payment Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Payment Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Global Payment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Granite City Food

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global Payment and Granite City

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

The idea behind Global Payment Technologies and Granite City Food 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.