Correlation Between GSR II and HHG Capital

Can any of the company-specific risk be diversified away by investing in both GSR II and HHG Capital 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 GSR II and HHG Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GSR II Meteora and HHG Capital, you can compare the effects of market volatilities on GSR II and HHG Capital 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 GSR II with a short position of HHG Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSR II and HHG Capital.

Diversification Opportunities for GSR II and HHG Capital

-0.42

Correlation Coefficient

GSR II  HHG Capital

Very good diversification

The 3 months correlation between GSR and HHG is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GSR II Meteora and HHG Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HHG Capital and GSR II 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 GSR II Meteora are associated (or correlated) with HHG Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HHG Capital has no effect on the direction of GSR II i.e., GSR II and HHG Capital go up and down completely randomly.

Pair Corralation between GSR II and HHG Capital

If you would invest  0.61  in HHG Capital on September 16, 2024 and sell it today you would lose (0.04) from holding HHG Capital or give up 6.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	9.09%
Values	Daily Returns

GSR II Meteora  vs.  HHG Capital

GSR II Meteora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSR II Meteora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, GSR II is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

HHG Capital

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days HHG Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal fundamental indicators, HHG Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GSR II and HHG Capital

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

The idea behind GSR II Meteora and HHG Capital 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.