Correlation Between Asian Sea and GFPT Public

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

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

Diversification Opportunities for Asian Sea and GFPT Public

0.13

Correlation Coefficient

Asian Sea  GFPT Public

Average diversification

The 3 months correlation between Asian and GFPT is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Asian Sea and GFPT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFPT Public and Asian Sea 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 Asian Sea are associated (or correlated) with GFPT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFPT Public has no effect on the direction of Asian Sea i.e., Asian Sea and GFPT Public go up and down completely randomly.

Pair Corralation between Asian Sea and GFPT Public

Assuming the 90 days trading horizon Asian Sea is expected to generate 0.66 times more return on investment than GFPT Public. However, Asian Sea is 1.51 times less risky than GFPT Public. It trades about 0.0 of its potential returns per unit of risk. GFPT Public is currently generating about -0.02 per unit of risk. If you would invest  805.00  in Asian Sea on December 30, 2024 and sell it today you would lose (5.00) from holding Asian Sea or give up 0.62% of portfolio value over 90 days.

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

Asian Sea  vs.  GFPT Public

Asian Sea

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asian Sea has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Asian Sea is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

GFPT Public

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Asian Sea and GFPT Public

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

The idea behind Asian Sea and GFPT Public 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.