Correlation Between Gan and Norwegian Cruise

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

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

Diversification Opportunities for Gan and Norwegian Cruise

0.29

Correlation Coefficient

Gan  Norwegian Cruise

Modest diversification

The 3 months correlation between Gan and Norwegian is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gan and Norwegian Cruise Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Cruise Line and Gan 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 Gan are associated (or correlated) with Norwegian Cruise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Cruise Line has no effect on the direction of Gan i.e., Gan and Norwegian Cruise go up and down completely randomly.

Pair Corralation between Gan and Norwegian Cruise

Considering the 90-day investment horizon Gan is expected to generate 0.43 times more return on investment than Norwegian Cruise. However, Gan is 2.33 times less risky than Norwegian Cruise. It trades about -0.07 of its potential returns per unit of risk. Norwegian Cruise Line is currently generating about -0.04 per unit of risk. If you would invest  183.00  in Gan on November 28, 2024 and sell it today you would lose (9.00) from holding Gan or give up 4.92% of portfolio value over 90 days.

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

Gan  vs.  Norwegian Cruise Line

Gan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Norwegian Cruise Line

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norwegian Cruise Line has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Gan and Norwegian Cruise

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

The idea behind Gan and Norwegian Cruise Line 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.