Correlation Between American Realty and GGE Old

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

By analyzing existing cross correlation between American Realty Investors and GGE Old, you can compare the effects of market volatilities on American Realty and GGE Old 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 American Realty with a short position of GGE Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Realty and GGE Old.

Diversification Opportunities for American Realty and GGE Old

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Correlation Coefficient

American Realty  GGE Old

Pay attention - limited upside

The 3 months correlation between American and GGE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Realty Investors and GGE Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGE Old and American Realty 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 American Realty Investors are associated (or correlated) with GGE Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGE Old has no effect on the direction of American Realty i.e., American Realty and GGE Old go up and down completely randomly.

Pair Corralation between American Realty and GGE Old

If you would invest  1,306  in American Realty Investors on December 18, 2024 and sell it today you would earn a total of  42.00  from holding American Realty Investors or generate 3.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Realty Investors  vs.  GGE Old

American Realty Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Realty Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, American Realty is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

GGE Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days GGE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GGE Old is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Realty and GGE Old

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

The idea behind American Realty Investors and GGE Old 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.