Correlation Between Conyers Park and GAMC Old

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

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

Diversification Opportunities for Conyers Park and GAMC Old

-0.53

Correlation Coefficient

Conyers Park  GAMC Old

Excellent diversification

The 3 months correlation between Conyers and GAMC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Conyers Park III and GAMC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMC Old and Conyers Park 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 Conyers Park III are associated (or correlated) with GAMC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMC Old has no effect on the direction of Conyers Park i.e., Conyers Park and GAMC Old go up and down completely randomly.

Pair Corralation between Conyers Park and GAMC Old

Given the investment horizon of 90 days Conyers Park III is expected to generate 0.04 times more return on investment than GAMC Old. However, Conyers Park III is 28.01 times less risky than GAMC Old. It trades about 0.11 of its potential returns per unit of risk. GAMC Old is currently generating about -0.06 per unit of risk. If you would invest  999.00  in Conyers Park III on October 10, 2024 and sell it today you would earn a total of  26.00  from holding Conyers Park III or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	32.17%
Values	Daily Returns

Conyers Park III  vs.  GAMC Old

Conyers Park III

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conyers Park III has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Conyers Park is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GAMC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, GAMC 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 Conyers Park and GAMC Old

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

The idea behind Conyers Park III and GAMC 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.