Correlation Between GDI Integrated and Dream Impact

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

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

Diversification Opportunities for GDI Integrated and Dream Impact

-0.15

Correlation Coefficient

GDI Integrated  Dream Impact

Good diversification

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

Pair Corralation between GDI Integrated and Dream Impact

Assuming the 90 days trading horizon GDI Integrated is expected to generate 0.77 times more return on investment than Dream Impact. However, GDI Integrated is 1.3 times less risky than Dream Impact. It trades about -0.05 of its potential returns per unit of risk. Dream Impact Trust is currently generating about -0.28 per unit of risk. If you would invest  3,600  in GDI Integrated on October 21, 2024 and sell it today you would lose (148.00) from holding GDI Integrated or give up 4.11% of portfolio value over 90 days.

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

GDI Integrated  vs.  Dream Impact Trust

GDI Integrated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GDI Integrated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, GDI Integrated is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Dream Impact Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Impact Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GDI Integrated and Dream Impact

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

The idea behind GDI Integrated and Dream Impact Trust 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.