Correlation Between Tungsten West and Gfinity PLC

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

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

Diversification Opportunities for Tungsten West and Gfinity PLC

0.42

Correlation Coefficient

Tungsten West  Gfinity PLC

Very weak diversification

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

Pair Corralation between Tungsten West and Gfinity PLC

Assuming the 90 days trading horizon Tungsten West is expected to generate 8.54 times less return on investment than Gfinity PLC. But when comparing it to its historical volatility, Tungsten West PLC is 1.71 times less risky than Gfinity PLC. It trades about 0.03 of its potential returns per unit of risk. Gfinity PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Gfinity PLC on September 13, 2024 and sell it today you would earn a total of  2.10  from holding Gfinity PLC or generate 110.53% return on investment over 90 days.

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

Tungsten West PLC  vs.  Gfinity PLC

Tungsten West PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tungsten West PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tungsten West exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gfinity PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gfinity PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gfinity PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tungsten West and Gfinity PLC

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

The idea behind Tungsten West PLC and Gfinity 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.