Correlation Between GSD Holding and Qnb Finansbank

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

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

Diversification Opportunities for GSD Holding and Qnb Finansbank

0.27

Correlation Coefficient

GSD Holding  Qnb Finansbank

Modest diversification

The 3 months correlation between GSD and Qnb is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GSD Holding AS and Qnb Finansbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qnb Finansbank AS and GSD Holding 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 GSD Holding AS are associated (or correlated) with Qnb Finansbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qnb Finansbank AS has no effect on the direction of GSD Holding i.e., GSD Holding and Qnb Finansbank go up and down completely randomly.

Pair Corralation between GSD Holding and Qnb Finansbank

Assuming the 90 days trading horizon GSD Holding is expected to generate 18.44 times less return on investment than Qnb Finansbank. But when comparing it to its historical volatility, GSD Holding AS is 2.05 times less risky than Qnb Finansbank. It trades about 0.02 of its potential returns per unit of risk. Qnb Finansbank AS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  26,650  in Qnb Finansbank AS on December 22, 2024 and sell it today you would earn a total of  10,675  from holding Qnb Finansbank AS or generate 40.06% return on investment over 90 days.

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

GSD Holding AS  vs.  Qnb Finansbank AS

GSD Holding AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GSD Holding AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, GSD Holding is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Qnb Finansbank AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qnb Finansbank AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Qnb Finansbank demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GSD Holding and Qnb Finansbank

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

The idea behind GSD Holding AS and Qnb Finansbank AS 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..