Correlation Between Growthpoint Properties and Ayo Technology

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Can any of the company-specific risk be diversified away by investing in both Growthpoint Properties and Ayo Technology 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 Growthpoint Properties and Ayo Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growthpoint Properties and Ayo Technology Solutions, you can compare the effects of market volatilities on Growthpoint Properties and Ayo Technology 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 Growthpoint Properties with a short position of Ayo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growthpoint Properties and Ayo Technology.

Diversification Opportunities for Growthpoint Properties and Ayo Technology

GrowthpointAyoDiversified AwayGrowthpointAyoDiversified Away100%
0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Growthpoint and Ayo is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Ayo Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayo Technology Solutions and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with Ayo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayo Technology Solutions has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Ayo Technology go up and down completely randomly.

Pair Corralation between Growthpoint Properties and Ayo Technology

Assuming the 90 days trading horizon Growthpoint Properties is expected to under-perform the Ayo Technology. But the stock apears to be less risky and, when comparing its historical volatility, Growthpoint Properties is 7.56 times less risky than Ayo Technology. The stock trades about -0.01 of its potential returns per unit of risk. The Ayo Technology Solutions is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,000  in Ayo Technology Solutions on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Ayo Technology Solutions or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

Growthpoint Properties  vs.  Ayo Technology Solutions

 Performance 
JavaScript chart by amCharts 3.21.15SepOctNov -20-15-10-50510
JavaScript chart by amCharts 3.21.15GRT AYO
       Timeline  
Growthpoint Properties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Growthpoint Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Growthpoint Properties is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1,2801,3001,3201,3401,3601,3801,4001,420
Ayo Technology Solutions 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ayo Technology Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Ayo Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec40455055

Growthpoint Properties and Ayo Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.81-1.35-0.89-0.43-0.0076070.40.861.321.782.24 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15GRT AYO
       Returns  

Pair Trading with Growthpoint Properties and Ayo Technology

The main advantage of trading using opposite Growthpoint Properties and Ayo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties position performs unexpectedly, Ayo Technology 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 Ayo Technology will offset losses from the drop in Ayo Technology's long position.
The idea behind Growthpoint Properties and Ayo Technology Solutions 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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