Correlation Between GX AI and Shopify

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

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

Diversification Opportunities for GX AI and Shopify

0.67

Correlation Coefficient

GX AI  Shopify

Poor diversification

The 3 months correlation between BAIQ39 and Shopify is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GX AI TECH and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and GX AI 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 GX AI TECH are associated (or correlated) with Shopify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shopify has no effect on the direction of GX AI i.e., GX AI and Shopify go up and down completely randomly.

Pair Corralation between GX AI and Shopify

Assuming the 90 days trading horizon GX AI is expected to generate 1.43 times less return on investment than Shopify. But when comparing it to its historical volatility, GX AI TECH is 2.19 times less risky than Shopify. It trades about 0.27 of its potential returns per unit of risk. Shopify is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  524.00  in Shopify on September 13, 2024 and sell it today you would earn a total of  54.00  from holding Shopify or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

GX AI TECH  vs.  Shopify

GX AI TECH

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GX AI TECH are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, GX AI sustained solid returns over the last few months and may actually be approaching a breakup point.

Shopify

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Shopify sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GX AI and Shopify

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

The idea behind GX AI TECH and Shopify 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.