Correlation Between Gordon Auto and De Licacy

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

By analyzing existing cross correlation between Gordon Auto Body and De Licacy Industrial, you can compare the effects of market volatilities on Gordon Auto and De Licacy 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 Gordon Auto with a short position of De Licacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gordon Auto and De Licacy.

Diversification Opportunities for Gordon Auto and De Licacy

-0.26

Correlation Coefficient

Gordon Auto  De Licacy

Very good diversification

The 3 months correlation between Gordon and 1464 is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gordon Auto Body and De Licacy Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Licacy Industrial and Gordon Auto 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 Gordon Auto Body are associated (or correlated) with De Licacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Licacy Industrial has no effect on the direction of Gordon Auto i.e., Gordon Auto and De Licacy go up and down completely randomly.

Pair Corralation between Gordon Auto and De Licacy

Assuming the 90 days trading horizon Gordon Auto Body is expected to generate 1.29 times more return on investment than De Licacy. However, Gordon Auto is 1.29 times more volatile than De Licacy Industrial. It trades about 0.1 of its potential returns per unit of risk. De Licacy Industrial is currently generating about 0.08 per unit of risk. If you would invest  3,945  in Gordon Auto Body on December 21, 2024 and sell it today you would earn a total of  485.00  from holding Gordon Auto Body or generate 12.29% return on investment over 90 days.

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

Gordon Auto Body  vs.  De Licacy Industrial

Gordon Auto Body

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gordon Auto Body are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gordon Auto showed solid returns over the last few months and may actually be approaching a breakup point.

De Licacy Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in De Licacy Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, De Licacy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gordon Auto and De Licacy

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

The idea behind Gordon Auto Body and De Licacy Industrial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.