Correlation Between GCS Holdings and Otsuka Information

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

By analyzing existing cross correlation between GCS Holdings and Otsuka Information Technology, you can compare the effects of market volatilities on GCS Holdings and Otsuka Information 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 GCS Holdings with a short position of Otsuka Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCS Holdings and Otsuka Information.

Diversification Opportunities for GCS Holdings and Otsuka Information

0.06

Correlation Coefficient

GCS Holdings  Otsuka Information

Significant diversification

The 3 months correlation between GCS and Otsuka is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GCS Holdings and Otsuka Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka Information and GCS Holdings 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 GCS Holdings are associated (or correlated) with Otsuka Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka Information has no effect on the direction of GCS Holdings i.e., GCS Holdings and Otsuka Information go up and down completely randomly.

Pair Corralation between GCS Holdings and Otsuka Information

Assuming the 90 days trading horizon GCS Holdings is expected to under-perform the Otsuka Information. In addition to that, GCS Holdings is 1.73 times more volatile than Otsuka Information Technology. It trades about -0.02 of its total potential returns per unit of risk. Otsuka Information Technology is currently generating about 0.13 per unit of volatility. If you would invest  16,750  in Otsuka Information Technology on December 4, 2024 and sell it today you would earn a total of  1,150  from holding Otsuka Information Technology or generate 6.87% return on investment over 90 days.

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

GCS Holdings  vs.  Otsuka Information Technology

GCS Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GCS Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, GCS Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Otsuka Information

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Otsuka Information Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Otsuka Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GCS Holdings and Otsuka Information

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

The idea behind GCS Holdings and Otsuka Information Technology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.