Correlation Between TOTAL BANGUN and GPT

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

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

Diversification Opportunities for TOTAL BANGUN and GPT

-0.6

Correlation Coefficient

TOTAL BANGUN  GPT

Excellent diversification

The 3 months correlation between TOTAL and GPT is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL BANGUN PERSAD and GPT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Group and TOTAL BANGUN 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 TOTAL BANGUN PERSAD are associated (or correlated) with GPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Group has no effect on the direction of TOTAL BANGUN i.e., TOTAL BANGUN and GPT go up and down completely randomly.

Pair Corralation between TOTAL BANGUN and GPT

Assuming the 90 days trading horizon TOTAL BANGUN PERSAD is expected to generate 2.41 times more return on investment than GPT. However, TOTAL BANGUN is 2.41 times more volatile than GPT Group. It trades about 0.06 of its potential returns per unit of risk. GPT Group is currently generating about 0.01 per unit of risk. If you would invest  2.70  in TOTAL BANGUN PERSAD on September 4, 2024 and sell it today you would earn a total of  0.35  from holding TOTAL BANGUN PERSAD or generate 12.96% return on investment over 90 days.

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

TOTAL BANGUN PERSAD  vs.  GPT Group

TOTAL BANGUN PERSAD

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL BANGUN PERSAD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TOTAL BANGUN unveiled solid returns over the last few months and may actually be approaching a breakup point.

GPT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GPT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TOTAL BANGUN and GPT

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

The idea behind TOTAL BANGUN PERSAD and GPT Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.