Correlation Between Gogoro Equity and Westport Fuel

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

Diversification Opportunities for Gogoro Equity and Westport Fuel

0.5

Correlation Coefficient

Gogoro Equity  Westport Fuel

Very weak diversification

The 3 months correlation between Gogoro and Westport is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gogoro Equity Warrant and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Gogoro Equity i.e., Gogoro Equity and Westport Fuel go up and down completely randomly.

Pair Corralation between Gogoro Equity and Westport Fuel

Assuming the 90 days horizon Gogoro Equity Warrant is expected to generate 5.53 times more return on investment than Westport Fuel. However, Gogoro Equity is 5.53 times more volatile than Westport Fuel Systems. It trades about 0.12 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about 0.04 per unit of risk. If you would invest  1.97  in Gogoro Equity Warrant on December 30, 2024 and sell it today you would earn a total of  0.60  from holding Gogoro Equity Warrant or generate 30.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.71%
Values	Daily Returns

Gogoro Equity Warrant  vs.  Westport Fuel Systems

Gogoro Equity Warrant

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gogoro Equity Warrant are ranked lower than 9 (%) 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.

Westport Fuel Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westport Fuel Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westport Fuel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gogoro Equity and Westport Fuel

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

The idea behind Gogoro Equity Warrant and Westport Fuel Systems 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.