Correlation Between GS Engineering and T3 Entertainment

Can any of the company-specific risk be diversified away by investing in both GS Engineering and T3 Entertainment 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 GS Engineering and T3 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GS Engineering Construction and T3 Entertainment Co, you can compare the effects of market volatilities on GS Engineering and T3 Entertainment 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 GS Engineering with a short position of T3 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Engineering and T3 Entertainment.

Diversification Opportunities for GS Engineering and T3 Entertainment

0.26

Correlation Coefficient

GS Engineering  T3 Entertainment

Modest diversification

The 3 months correlation between 006360 and 204610 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding GS Engineering Construction and T3 Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T3 Entertainment and GS Engineering 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 GS Engineering Construction are associated (or correlated) with T3 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T3 Entertainment has no effect on the direction of GS Engineering i.e., GS Engineering and T3 Entertainment go up and down completely randomly.

Pair Corralation between GS Engineering and T3 Entertainment

Assuming the 90 days trading horizon GS Engineering Construction is expected to under-perform the T3 Entertainment. In addition to that, GS Engineering is 1.87 times more volatile than T3 Entertainment Co. It trades about -0.14 of its total potential returns per unit of risk. T3 Entertainment Co is currently generating about -0.05 per unit of volatility. If you would invest  155,300  in T3 Entertainment Co on October 1, 2024 and sell it today you would lose (3,000) from holding T3 Entertainment Co or give up 1.93% of portfolio value over 90 days.

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

GS Engineering Construction  vs.  T3 Entertainment Co

GS Engineering Const

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GS Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GS Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

T3 Entertainment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T3 Entertainment Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, T3 Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GS Engineering and T3 Entertainment

The main advantage of trading using opposite GS Engineering and T3 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Engineering position performs unexpectedly, T3 Entertainment 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 T3 Entertainment will offset losses from the drop in T3 Entertainment's long position.

The idea behind GS Engineering Construction and T3 Entertainment Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.