Correlation Between GPT Healthcare and Global Health

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

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

Diversification Opportunities for GPT Healthcare and Global Health

-0.36

Correlation Coefficient

GPT Healthcare  Global Health

Very good diversification

The 3 months correlation between GPT and Global is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GPT Healthcare and Global Health Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health 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 Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health Limited has no effect on the direction of GPT Healthcare i.e., GPT Healthcare and Global Health go up and down completely randomly.

Pair Corralation between GPT Healthcare and Global Health

Assuming the 90 days trading horizon GPT Healthcare is expected to under-perform the Global Health. But the stock apears to be less risky and, when comparing its historical volatility, GPT Healthcare is 1.15 times less risky than Global Health. The stock trades about -0.23 of its potential returns per unit of risk. The Global Health Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  110,005  in Global Health Limited on December 1, 2024 and sell it today you would earn a total of  4,960  from holding Global Health Limited or generate 4.51% return on investment over 90 days.

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

GPT Healthcare  vs.  Global Health Limited

GPT Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days GPT Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Global Health Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Health Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GPT Healthcare and Global Health

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

The idea behind GPT Healthcare and Global Health 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.