Correlation Between GP Investments and Tres Tentos

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

By analyzing existing cross correlation between GP Investments and Tres Tentos Agroindustrial, you can compare the effects of market volatilities on GP Investments and Tres Tentos 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 Tres Tentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Tres Tentos.

Diversification Opportunities for GP Investments and Tres Tentos

0.07

Correlation Coefficient

GP Investments  Tres Tentos

Significant diversification

The 3 months correlation between GPIV33 and Tres is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Tres Tentos Agroindustrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tres Tentos Agroindu 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 Tres Tentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tres Tentos Agroindu has no effect on the direction of GP Investments i.e., GP Investments and Tres Tentos go up and down completely randomly.

Pair Corralation between GP Investments and Tres Tentos

Assuming the 90 days trading horizon GP Investments is expected to generate 1.1 times less return on investment than Tres Tentos. In addition to that, GP Investments is 1.47 times more volatile than Tres Tentos Agroindustrial. It trades about 0.04 of its total potential returns per unit of risk. Tres Tentos Agroindustrial is currently generating about 0.07 per unit of volatility. If you would invest  1,373  in Tres Tentos Agroindustrial on December 28, 2024 and sell it today you would earn a total of  113.00  from holding Tres Tentos Agroindustrial or generate 8.23% return on investment over 90 days.

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

GP Investments  vs.  Tres Tentos Agroindustrial

GP Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, GP Investments may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tres Tentos Agroindu

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tres Tentos Agroindustrial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Tres Tentos may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GP Investments and Tres Tentos

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

The idea behind GP Investments and Tres Tentos Agroindustrial 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 CEOs Directory module to screen CEOs from public companies around the world.