Correlation Between GPT and Stockland
Can any of the company-specific risk be diversified away by investing in both GPT and Stockland 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 Stockland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GPT Group and Stockland, you can compare the effects of market volatilities on GPT and Stockland 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 Stockland. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPT and Stockland.
Diversification Opportunities for GPT and Stockland
Very poor diversification
The 3 months correlation between GPT and Stockland is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GPT Group and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland 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 Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of GPT i.e., GPT and Stockland go up and down completely randomly.
Pair Corralation between GPT and Stockland
Assuming the 90 days horizon GPT Group is expected to generate 0.96 times more return on investment than Stockland. However, GPT Group is 1.04 times less risky than Stockland. It trades about -0.11 of its potential returns per unit of risk. Stockland is currently generating about -0.3 per unit of risk. If you would invest 274.00 in GPT Group on September 22, 2024 and sell it today you would lose (9.00) from holding GPT Group or give up 3.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
GPT Group vs. Stockland
Performance |
Timeline |
GPT Group |
Stockland |
GPT and Stockland Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GPT and Stockland
The main advantage of trading using opposite GPT and Stockland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GPT position performs unexpectedly, Stockland 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 Stockland will offset losses from the drop in Stockland's long position.The idea behind GPT Group and Stockland 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.Stockland vs. Crown Castle International | Stockland vs. Equinix | Stockland vs. W P Carey | Stockland vs. Gaming and Leisure |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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