Correlation Between GP Investments and JBS ON

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

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

Diversification Opportunities for GP Investments and JBS ON

-0.43

Correlation Coefficient

GP Investments  JBS ON

Very good diversification

The 3 months correlation between GPIV33 and JBS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and JBS ON NM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS ON NM and GP Investments 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 GP Investments are associated (or correlated) with JBS ON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS ON NM has no effect on the direction of GP Investments i.e., GP Investments and JBS ON go up and down completely randomly.

Pair Corralation between GP Investments and JBS ON

Assuming the 90 days trading horizon GP Investments is expected to generate 2.03 times more return on investment than JBS ON. However, GP Investments is 2.03 times more volatile than JBS ON NM. It trades about 0.12 of its potential returns per unit of risk. JBS ON NM is currently generating about -0.25 per unit of risk. If you would invest  377.00  in GP Investments on October 9, 2024 and sell it today you would earn a total of  27.00  from holding GP Investments or generate 7.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

GP Investments  vs.  JBS ON NM

GP Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JBS ON NM

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JBS ON NM are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JBS ON sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GP Investments and JBS ON

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

The idea behind GP Investments and JBS ON NM 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.