Correlation Between Ausom Enterprise and GTL

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

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

Diversification Opportunities for Ausom Enterprise and GTL

0.78

Correlation Coefficient

Ausom Enterprise  GTL

Poor diversification

The 3 months correlation between Ausom and GTL is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ausom Enterprise Limited and GTL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTL Limited and Ausom Enterprise 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 Ausom Enterprise Limited are associated (or correlated) with GTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTL Limited has no effect on the direction of Ausom Enterprise i.e., Ausom Enterprise and GTL go up and down completely randomly.

Pair Corralation between Ausom Enterprise and GTL

Assuming the 90 days trading horizon Ausom Enterprise Limited is expected to generate 0.66 times more return on investment than GTL. However, Ausom Enterprise Limited is 1.51 times less risky than GTL. It trades about -0.08 of its potential returns per unit of risk. GTL Limited is currently generating about -0.13 per unit of risk. If you would invest  10,345  in Ausom Enterprise Limited on November 20, 2024 and sell it today you would lose (989.00) from holding Ausom Enterprise Limited or give up 9.56% of portfolio value over 90 days.

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

Ausom Enterprise Limited  vs.  GTL Limited

Ausom Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ausom Enterprise Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

GTL Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days GTL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ausom Enterprise and GTL

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

The idea behind Ausom Enterprise Limited and GTL Limited 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.