Correlation Between Gobarto SA and Stalprodukt

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

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

Diversification Opportunities for Gobarto SA and Stalprodukt

-0.52

Correlation Coefficient

Gobarto SA  Stalprodukt

Excellent diversification

The 3 months correlation between Gobarto and Stalprodukt is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gobarto SA and Stalprodukt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stalprodukt SA and Gobarto SA 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 Gobarto SA are associated (or correlated) with Stalprodukt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stalprodukt SA has no effect on the direction of Gobarto SA i.e., Gobarto SA and Stalprodukt go up and down completely randomly.

Pair Corralation between Gobarto SA and Stalprodukt

Assuming the 90 days trading horizon Gobarto SA is expected to under-perform the Stalprodukt. In addition to that, Gobarto SA is 1.87 times more volatile than Stalprodukt SA. It trades about 0.0 of its total potential returns per unit of risk. Stalprodukt SA is currently generating about 0.21 per unit of volatility. If you would invest  22,200  in Stalprodukt SA on December 26, 2024 and sell it today you would earn a total of  6,500  from holding Stalprodukt SA or generate 29.28% return on investment over 90 days.

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

Gobarto SA  vs.  Stalprodukt SA

Gobarto SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gobarto SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Gobarto SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Stalprodukt SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stalprodukt SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Stalprodukt reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gobarto SA and Stalprodukt

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

The idea behind Gobarto SA and Stalprodukt SA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.