Correlation Between Marks and GSTechnologies

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

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

Diversification Opportunities for Marks and GSTechnologies

0.34

Correlation Coefficient

Marks  GSTechnologies

Weak diversification

The 3 months correlation between Marks and GSTechnologies is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Marks and Spencer and GSTechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSTechnologies and Marks 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 Marks and Spencer are associated (or correlated) with GSTechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSTechnologies has no effect on the direction of Marks i.e., Marks and GSTechnologies go up and down completely randomly.

Pair Corralation between Marks and GSTechnologies

Assuming the 90 days trading horizon Marks is expected to generate 52.61 times less return on investment than GSTechnologies. But when comparing it to its historical volatility, Marks and Spencer is 4.72 times less risky than GSTechnologies. It trades about 0.02 of its potential returns per unit of risk. GSTechnologies is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  78.00  in GSTechnologies on September 23, 2024 and sell it today you would earn a total of  100.00  from holding GSTechnologies or generate 128.21% return on investment over 90 days.

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

Marks and Spencer  vs.  GSTechnologies

Marks and Spencer

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marks and Spencer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Marks is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

GSTechnologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GSTechnologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GSTechnologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marks and GSTechnologies

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

The idea behind Marks and Spencer and GSTechnologies 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.