Correlation Between Garda Diversified and MotorCycle Holdings

Can any of the company-specific risk be diversified away by investing in both Garda Diversified and MotorCycle Holdings 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 MotorCycle Holdings 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 MotorCycle Holdings, you can compare the effects of market volatilities on Garda Diversified and MotorCycle Holdings 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 MotorCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garda Diversified and MotorCycle Holdings.

Diversification Opportunities for Garda Diversified and MotorCycle Holdings

0.48

Correlation Coefficient

Garda Diversified  MotorCycle Holdings

Very weak diversification

The 3 months correlation between Garda and MotorCycle is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Garda Diversified Ppty and MotorCycle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MotorCycle Holdings 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 MotorCycle Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MotorCycle Holdings has no effect on the direction of Garda Diversified i.e., Garda Diversified and MotorCycle Holdings go up and down completely randomly.

Pair Corralation between Garda Diversified and MotorCycle Holdings

Assuming the 90 days trading horizon Garda Diversified is expected to generate 1.96 times less return on investment than MotorCycle Holdings. But when comparing it to its historical volatility, Garda Diversified Ppty is 2.05 times less risky than MotorCycle Holdings. It trades about 0.01 of its potential returns per unit of risk. MotorCycle Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  203.00  in MotorCycle Holdings on September 20, 2024 and sell it today you would lose (16.00) from holding MotorCycle Holdings or give up 7.88% of portfolio value over 90 days.

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

Garda Diversified Ppty  vs.  MotorCycle Holdings

Garda Diversified Ppty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garda Diversified Ppty are ranked lower than 4 (%) 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.

MotorCycle Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MotorCycle Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, MotorCycle Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Garda Diversified and MotorCycle Holdings

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

The idea behind Garda Diversified Ppty and MotorCycle Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.