Correlation Between GPT Healthcare and Dodla Dairy

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

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

Diversification Opportunities for GPT Healthcare and Dodla Dairy

0.28

Correlation Coefficient

GPT Healthcare  Dodla Dairy

Modest diversification

The 3 months correlation between GPT and Dodla is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding GPT Healthcare and Dodla Dairy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodla Dairy Limited and GPT Healthcare 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 GPT Healthcare are associated (or correlated) with Dodla Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodla Dairy Limited has no effect on the direction of GPT Healthcare i.e., GPT Healthcare and Dodla Dairy go up and down completely randomly.

Pair Corralation between GPT Healthcare and Dodla Dairy

Assuming the 90 days trading horizon GPT Healthcare is expected to under-perform the Dodla Dairy. In addition to that, GPT Healthcare is 1.08 times more volatile than Dodla Dairy Limited. It trades about 0.0 of its total potential returns per unit of risk. Dodla Dairy Limited is currently generating about 0.07 per unit of volatility. If you would invest  88,635  in Dodla Dairy Limited on October 5, 2024 and sell it today you would earn a total of  36,665  from holding Dodla Dairy Limited or generate 41.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.31%
Values	Daily Returns

GPT Healthcare  vs.  Dodla Dairy Limited

GPT Healthcare

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GPT Healthcare are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, GPT Healthcare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dodla Dairy Limited

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dodla Dairy Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Dodla Dairy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GPT Healthcare and Dodla Dairy

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

The idea behind GPT Healthcare and Dodla Dairy Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.