Correlation Between GB Group and Tracsis Plc

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

By analyzing existing cross correlation between GB Group plc and Tracsis Plc, you can compare the effects of market volatilities on GB Group and Tracsis Plc 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 GB Group with a short position of Tracsis Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of GB Group and Tracsis Plc.

Diversification Opportunities for GB Group and Tracsis Plc

0.2

Correlation Coefficient

GB Group  Tracsis Plc

Modest diversification

The 3 months correlation between GBG and Tracsis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GB Group plc and Tracsis Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tracsis Plc and GB Group 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 GB Group plc are associated (or correlated) with Tracsis Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tracsis Plc has no effect on the direction of GB Group i.e., GB Group and Tracsis Plc go up and down completely randomly.

Pair Corralation between GB Group and Tracsis Plc

Assuming the 90 days trading horizon GB Group plc is expected to generate 0.83 times more return on investment than Tracsis Plc. However, GB Group plc is 1.2 times less risky than Tracsis Plc. It trades about 0.1 of its potential returns per unit of risk. Tracsis Plc is currently generating about -0.07 per unit of risk. If you would invest  32,100  in GB Group plc on September 5, 2024 and sell it today you would earn a total of  5,560  from holding GB Group plc or generate 17.32% return on investment over 90 days.

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

GB Group plc  vs.  Tracsis Plc

GB Group plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GB Group plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GB Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tracsis Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tracsis Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GB Group and Tracsis Plc

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

The idea behind GB Group plc and Tracsis Plc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.