Correlation Between Gs Retail and Top Material

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

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

Diversification Opportunities for Gs Retail and Top Material

-0.45

Correlation Coefficient

Gs Retail  Top Material

Very good diversification

The 3 months correlation between 007070 and Top is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gs Retail and Top Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Material and Gs Retail 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 Retail are associated (or correlated) with Top Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Material has no effect on the direction of Gs Retail i.e., Gs Retail and Top Material go up and down completely randomly.

Pair Corralation between Gs Retail and Top Material

Assuming the 90 days trading horizon Gs Retail is expected to generate 0.21 times more return on investment than Top Material. However, Gs Retail is 4.74 times less risky than Top Material. It trades about 0.47 of its potential returns per unit of risk. Top Material Co is currently generating about -0.1 per unit of risk. If you would invest  2,120,875  in Gs Retail on September 19, 2024 and sell it today you would earn a total of  194,125  from holding Gs Retail or generate 9.15% return on investment over 90 days.

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

Gs Retail  vs.  Top Material Co

Gs Retail

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gs Retail are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gs Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Top Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Top Material Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gs Retail and Top Material

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

The idea behind Gs Retail and Top Material 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.