Correlation Between GPT and Gaming

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

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

Diversification Opportunities for GPT and Gaming

0.22

Correlation Coefficient

GPT  Gaming

Modest diversification

The 3 months correlation between GPT and Gaming is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding GPT Group and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure and GPT 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 GPT Group are associated (or correlated) with Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of GPT i.e., GPT and Gaming go up and down completely randomly.

Pair Corralation between GPT and Gaming

Assuming the 90 days horizon GPT is expected to generate 1.91 times less return on investment than Gaming. In addition to that, GPT is 2.66 times more volatile than Gaming and Leisure. It trades about 0.01 of its total potential returns per unit of risk. Gaming and Leisure is currently generating about 0.04 per unit of volatility. If you would invest  4,502  in Gaming and Leisure on December 11, 2024 and sell it today you would earn a total of  103.00  from holding Gaming and Leisure or generate 2.29% return on investment over 90 days.

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

GPT Group  vs.  Gaming and Leisure

GPT Group

Risk-Adjusted Performance

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Gaming and Leisure

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GPT and Gaming

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

The idea behind GPT Group and Gaming and Leisure 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.