Correlation Between GPT Healthcare and Southern Petrochemicals

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

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

Diversification Opportunities for GPT Healthcare and Southern Petrochemicals

0.4

Correlation Coefficient

GPT Healthcare  Southern Petrochemicals

Very weak diversification

The 3 months correlation between GPT and Southern is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GPT Healthcare and Southern Petrochemicals Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Petrochemicals 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 Southern Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Petrochemicals has no effect on the direction of GPT Healthcare i.e., GPT Healthcare and Southern Petrochemicals go up and down completely randomly.

Pair Corralation between GPT Healthcare and Southern Petrochemicals

Assuming the 90 days trading horizon GPT Healthcare is expected to generate 6.26 times less return on investment than Southern Petrochemicals. In addition to that, GPT Healthcare is 1.08 times more volatile than Southern Petrochemicals Industries. It trades about 0.0 of its total potential returns per unit of risk. Southern Petrochemicals Industries is currently generating about 0.01 per unit of volatility. If you would invest  7,575  in Southern Petrochemicals Industries on September 29, 2024 and sell it today you would lose (192.00) from holding Southern Petrochemicals Industries or give up 2.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	42.39%
Values	Daily Returns

GPT Healthcare  vs.  Southern Petrochemicals Indust

GPT Healthcare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GPT Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Southern Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Petrochemicals Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GPT Healthcare and Southern Petrochemicals

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

The idea behind GPT Healthcare and Southern Petrochemicals Industries 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.