Correlation Between GO2 People and Coles

Can any of the company-specific risk be diversified away by investing in both GO2 People and Coles 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 GO2 People and Coles into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GO2 People and Coles Group, you can compare the effects of market volatilities on GO2 People and Coles 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 GO2 People with a short position of Coles. Check out your portfolio center. Please also check ongoing floating volatility patterns of GO2 People and Coles.

Diversification Opportunities for GO2 People and Coles

0.0

Correlation Coefficient

GO2 People  Coles

Pay attention - limited upside

The 3 months correlation between GO2 and Coles is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GO2 People and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and GO2 People 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 GO2 People are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of GO2 People i.e., GO2 People and Coles go up and down completely randomly.

Pair Corralation between GO2 People and Coles

Assuming the 90 days trading horizon GO2 People is expected to generate 51.42 times more return on investment than Coles. However, GO2 People is 51.42 times more volatile than Coles Group. It trades about 0.05 of its potential returns per unit of risk. Coles Group is currently generating about 0.04 per unit of risk. If you would invest  1.10  in GO2 People on October 13, 2024 and sell it today you would earn a total of  65.90  from holding GO2 People or generate 5990.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.2%
Values	Daily Returns

GO2 People  vs.  Coles Group

GO2 People

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GO2 People has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GO2 People is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Coles Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coles Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Coles is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GO2 People and Coles

The main advantage of trading using opposite GO2 People and Coles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GO2 People position performs unexpectedly, Coles 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 Coles will offset losses from the drop in Coles' long position.

The idea behind GO2 People and Coles Group 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.