Correlation Between GTL and State Tradingof

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Can any of the company-specific risk be diversified away by investing in both GTL and State Tradingof 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 GTL and State Tradingof into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GTL Limited and The State Trading, you can compare the effects of market volatilities on GTL and State Tradingof 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 GTL with a short position of State Tradingof. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTL and State Tradingof.

Diversification Opportunities for GTL and State Tradingof

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between GTL and State is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GTL Limited and The State Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Tradingof and GTL 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 GTL Limited are associated (or correlated) with State Tradingof. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Tradingof has no effect on the direction of GTL i.e., GTL and State Tradingof go up and down completely randomly.

Pair Corralation between GTL and State Tradingof

Assuming the 90 days trading horizon GTL Limited is expected to under-perform the State Tradingof. But the stock apears to be less risky and, when comparing its historical volatility, GTL Limited is 1.51 times less risky than State Tradingof. The stock trades about -0.57 of its potential returns per unit of risk. The The State Trading is currently generating about -0.36 of returns per unit of risk over similar time horizon. If you would invest  15,192  in The State Trading on November 20, 2024 and sell it today you would lose (3,033) from holding The State Trading or give up 19.96% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

GTL Limited  vs.  The State Trading

 Performance 
       Timeline  
GTL Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days GTL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
State Tradingof 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days The State Trading 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 fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

GTL and State Tradingof Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GTL and State Tradingof

The main advantage of trading using opposite GTL and State Tradingof positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL position performs unexpectedly, State Tradingof 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 State Tradingof will offset losses from the drop in State Tradingof's long position.
The idea behind GTL Limited and The State Trading 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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