Correlation Between Entertainment Network and GPT Healthcare

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

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

Diversification Opportunities for Entertainment Network and GPT Healthcare

0.64

Correlation Coefficient

Entertainment Network  GPT Healthcare

Poor diversification

The 3 months correlation between Entertainment and GPT is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Entertainment Network Limited and GPT Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Healthcare and Entertainment Network 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 Entertainment Network Limited are associated (or correlated) with GPT Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Healthcare has no effect on the direction of Entertainment Network i.e., Entertainment Network and GPT Healthcare go up and down completely randomly.

Pair Corralation between Entertainment Network and GPT Healthcare

Assuming the 90 days trading horizon Entertainment Network Limited is expected to under-perform the GPT Healthcare. In addition to that, Entertainment Network is 1.36 times more volatile than GPT Healthcare. It trades about -0.04 of its total potential returns per unit of risk. GPT Healthcare is currently generating about 0.01 per unit of volatility. If you would invest  18,127  in GPT Healthcare on September 5, 2024 and sell it today you would earn a total of  95.00  from holding GPT Healthcare or generate 0.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Entertainment Network Limited  vs.  GPT Healthcare

Entertainment Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entertainment Network Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GPT Healthcare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GPT Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Entertainment Network and GPT Healthcare

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

The idea behind Entertainment Network Limited and GPT Healthcare 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.