Correlation Between Gogoro Equity and Linamar

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

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

Diversification Opportunities for Gogoro Equity and Linamar

0.44

Correlation Coefficient

Gogoro Equity  Linamar

Very weak diversification

The 3 months correlation between Gogoro and Linamar is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gogoro Equity Warrant and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar and Gogoro Equity 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 Gogoro Equity Warrant are associated (or correlated) with Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of Gogoro Equity i.e., Gogoro Equity and Linamar go up and down completely randomly.

Pair Corralation between Gogoro Equity and Linamar

Assuming the 90 days horizon Gogoro Equity Warrant is expected to generate 11.21 times more return on investment than Linamar. However, Gogoro Equity is 11.21 times more volatile than Linamar. It trades about 0.02 of its potential returns per unit of risk. Linamar is currently generating about -0.05 per unit of risk. If you would invest  5.15  in Gogoro Equity Warrant on August 31, 2024 and sell it today you would lose (3.15) from holding Gogoro Equity Warrant or give up 61.17% of portfolio value over 90 days.

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

Gogoro Equity Warrant  vs.  Linamar

Gogoro Equity Warrant

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gogoro Equity Warrant are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gogoro Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Linamar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linamar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Linamar is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gogoro Equity and Linamar

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

The idea behind Gogoro Equity Warrant and Linamar 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.