Correlation Between GDI Property and Falcon Metals

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

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

Diversification Opportunities for GDI Property and Falcon Metals

-0.3

Correlation Coefficient

GDI Property  Falcon Metals

Very good diversification

The 3 months correlation between GDI and Falcon is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding GDI Property Group and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals and GDI Property 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 GDI Property Group are associated (or correlated) with Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of GDI Property i.e., GDI Property and Falcon Metals go up and down completely randomly.

Pair Corralation between GDI Property and Falcon Metals

Assuming the 90 days trading horizon GDI Property is expected to generate 1.54 times less return on investment than Falcon Metals. But when comparing it to its historical volatility, GDI Property Group is 3.69 times less risky than Falcon Metals. It trades about 0.12 of its potential returns per unit of risk. Falcon Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Falcon Metals on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Falcon Metals or generate 8.33% return on investment over 90 days.

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

GDI Property Group  vs.  Falcon Metals

GDI Property Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Property Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, GDI Property unveiled solid returns over the last few months and may actually be approaching a breakup point.

Falcon Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Falcon Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GDI Property and Falcon Metals

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

The idea behind GDI Property Group and Falcon Metals 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.