Correlation Between GCL Poly and Clear Blue

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

By analyzing existing cross correlation between GCL Poly Energy Holdings and Clear Blue Technologies, you can compare the effects of market volatilities on GCL Poly and Clear Blue 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 GCL Poly with a short position of Clear Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCL Poly and Clear Blue.

Diversification Opportunities for GCL Poly and Clear Blue

-0.25

Correlation Coefficient

GCL Poly  Clear Blue

Very good diversification

The 3 months correlation between GCL and Clear is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding GCL Poly Energy Holdings and Clear Blue Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Blue Technologies and GCL Poly 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 GCL Poly Energy Holdings are associated (or correlated) with Clear Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Blue Technologies has no effect on the direction of GCL Poly i.e., GCL Poly and Clear Blue go up and down completely randomly.

Pair Corralation between GCL Poly and Clear Blue

Assuming the 90 days horizon GCL Poly Energy Holdings is expected to generate 6.63 times more return on investment than Clear Blue. However, GCL Poly is 6.63 times more volatile than Clear Blue Technologies. It trades about 0.16 of its potential returns per unit of risk. Clear Blue Technologies is currently generating about -0.2 per unit of risk. If you would invest  11.00  in GCL Poly Energy Holdings on October 27, 2024 and sell it today you would earn a total of  3.00  from holding GCL Poly Energy Holdings or generate 27.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

GCL Poly Energy Holdings  vs.  Clear Blue Technologies

GCL Poly Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GCL Poly Energy Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, GCL Poly is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Clear Blue Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Blue Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GCL Poly and Clear Blue

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

The idea behind GCL Poly Energy Holdings and Clear Blue Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.