Correlation Between G Tec and Global Health

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

By analyzing existing cross correlation between G Tec Jainx Education and Global Health Limited, you can compare the effects of market volatilities on G Tec 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 G Tec with a short position of Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Tec and Global Health.

Diversification Opportunities for G Tec and Global Health

0.09

Correlation Coefficient

G Tec  Global Health

Significant diversification

The 3 months correlation between GTECJAINX and Global is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education 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 G Tec 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 G Tec Jainx Education 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 G Tec i.e., G Tec and Global Health go up and down completely randomly.

Pair Corralation between G Tec and Global Health

Assuming the 90 days trading horizon G Tec Jainx Education is expected to under-perform the Global Health. In addition to that, G Tec is 1.85 times more volatile than Global Health Limited. It trades about -0.4 of its total potential returns per unit of risk. Global Health Limited is currently generating about 0.09 per unit of volatility. If you would invest  106,735  in Global Health Limited on September 4, 2024 and sell it today you would earn a total of  3,270  from holding Global Health Limited or generate 3.06% return on investment over 90 days.

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

G Tec Jainx Education  vs.  Global Health Limited

G Tec Jainx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Tec Jainx Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Global Health Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Health Limited has generated negative risk-adjusted returns adding no value to investors with long positions. 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 G Tec and Global Health

The main advantage of trading using opposite G Tec and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G Tec 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 G Tec Jainx Education 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.