Correlation Between GCL-Poly Energy and Meyer Burger

Can any of the company-specific risk be diversified away by investing in both GCL-Poly Energy and Meyer Burger 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 Energy and Meyer Burger 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 Meyer Burger Technology, you can compare the effects of market volatilities on GCL-Poly Energy and Meyer Burger 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 Energy with a short position of Meyer Burger. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCL-Poly Energy and Meyer Burger.

Diversification Opportunities for GCL-Poly Energy and Meyer Burger

0.32

Correlation Coefficient

GCL-Poly Energy  Meyer Burger

Weak diversification

The 3 months correlation between GCL-Poly and Meyer is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GCL Poly Energy Holdings and Meyer Burger Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meyer Burger Technology and GCL-Poly Energy 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 Meyer Burger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meyer Burger Technology has no effect on the direction of GCL-Poly Energy i.e., GCL-Poly Energy and Meyer Burger go up and down completely randomly.

Pair Corralation between GCL-Poly Energy and Meyer Burger

Assuming the 90 days horizon GCL Poly Energy Holdings is expected to generate 0.88 times more return on investment than Meyer Burger. However, GCL Poly Energy Holdings is 1.13 times less risky than Meyer Burger. It trades about 0.08 of its potential returns per unit of risk. Meyer Burger Technology is currently generating about 0.02 per unit of risk. If you would invest  11.00  in GCL Poly Energy Holdings on December 19, 2024 and sell it today you would earn a total of  2.00  from holding GCL Poly Energy Holdings or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.67%
Values	Daily Returns

GCL Poly Energy Holdings  vs.  Meyer Burger Technology

GCL Poly Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GCL Poly Energy Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, GCL-Poly Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Meyer Burger Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meyer Burger Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Meyer Burger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCL-Poly Energy and Meyer Burger

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

The idea behind GCL Poly Energy Holdings and Meyer Burger Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.