Correlation Between GSC and MTL

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

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

Diversification Opportunities for GSC and MTL

0.29

Correlation Coefficient

GSC  MTL

Modest diversification

The 3 months correlation between GSC and MTL is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GSC and MTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTL and GSC 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 GSC are associated (or correlated) with MTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTL has no effect on the direction of GSC i.e., GSC and MTL go up and down completely randomly.

Pair Corralation between GSC and MTL

If you would invest  156.00  in MTL on September 1, 2024 and sell it today you would lose (1.00) from holding MTL or give up 0.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.76%
Values	Daily Returns

GSC  vs.  MTL

GSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, GSC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

MTL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MTL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, MTL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GSC and MTL

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

The idea behind GSC and MTL 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..