Correlation Between Garda Diversified and EROAD

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

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

Diversification Opportunities for Garda Diversified and EROAD

-0.15

Correlation Coefficient

Garda Diversified  EROAD

Good diversification

The 3 months correlation between Garda and EROAD is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Garda Diversified Ppty and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Garda Diversified 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 Garda Diversified Ppty are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Garda Diversified i.e., Garda Diversified and EROAD go up and down completely randomly.

Pair Corralation between Garda Diversified and EROAD

Assuming the 90 days trading horizon Garda Diversified Ppty is expected to under-perform the EROAD. But the stock apears to be less risky and, when comparing its historical volatility, Garda Diversified Ppty is 3.31 times less risky than EROAD. The stock trades about 0.0 of its potential returns per unit of risk. The EROAD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  75.00  in EROAD on October 21, 2024 and sell it today you would earn a total of  23.00  from holding EROAD or generate 30.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Garda Diversified Ppty  vs.  EROAD

Garda Diversified Ppty

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garda Diversified Ppty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Garda Diversified is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

EROAD

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Garda Diversified and EROAD

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

The idea behind Garda Diversified Ppty and EROAD 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.