Correlation Between Provision Information and GCS Holdings

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

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

Diversification Opportunities for Provision Information and GCS Holdings

-0.14

Correlation Coefficient

Provision Information  GCS Holdings

Good diversification

The 3 months correlation between Provision and GCS is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Provision Information CoLtd and GCS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCS Holdings and Provision Information 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 Provision Information CoLtd are associated (or correlated) with GCS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCS Holdings has no effect on the direction of Provision Information i.e., Provision Information and GCS Holdings go up and down completely randomly.

Pair Corralation between Provision Information and GCS Holdings

Assuming the 90 days trading horizon Provision Information is expected to generate 36.45 times less return on investment than GCS Holdings. But when comparing it to its historical volatility, Provision Information CoLtd is 2.88 times less risky than GCS Holdings. It trades about 0.03 of its potential returns per unit of risk. GCS Holdings is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  3,950  in GCS Holdings on September 15, 2024 and sell it today you would earn a total of  5,350  from holding GCS Holdings or generate 135.44% return on investment over 90 days.

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

Provision Information CoLtd  vs.  GCS Holdings

Provision Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Provision Information is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GCS Holdings

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GCS Holdings are ranked lower than 25 (%) 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.

Pair Trading with Provision Information and GCS Holdings

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

The idea behind Provision Information CoLtd and GCS Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.