Correlation Between Guaranty Trust and Trellus Health

Can any of the company-specific risk be diversified away by investing in both Guaranty Trust and Trellus Health 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 Guaranty Trust and Trellus Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guaranty Trust Holding and Trellus Health plc, you can compare the effects of market volatilities on Guaranty Trust and Trellus Health 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 Guaranty Trust with a short position of Trellus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guaranty Trust and Trellus Health.

Diversification Opportunities for Guaranty Trust and Trellus Health

-0.47

Correlation Coefficient

Guaranty Trust  Trellus Health

Very good diversification

The 3 months correlation between Guaranty and Trellus is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health plc and Guaranty Trust 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 Guaranty Trust Holding are associated (or correlated) with Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of Guaranty Trust i.e., Guaranty Trust and Trellus Health go up and down completely randomly.

Pair Corralation between Guaranty Trust and Trellus Health

Assuming the 90 days trading horizon Guaranty Trust Holding is expected to generate 0.52 times more return on investment than Trellus Health. However, Guaranty Trust Holding is 1.92 times less risky than Trellus Health. It trades about 0.05 of its potential returns per unit of risk. Trellus Health plc is currently generating about -0.2 per unit of risk. If you would invest  175.00  in Guaranty Trust Holding on September 28, 2024 and sell it today you would earn a total of  10.00  from holding Guaranty Trust Holding or generate 5.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Guaranty Trust Holding  vs.  Trellus Health plc

Guaranty Trust Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Guaranty Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Trellus Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellus Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Guaranty Trust and Trellus Health

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

The idea behind Guaranty Trust Holding and Trellus Health plc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.