Correlation Between Gtn and Technology One

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

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

Diversification Opportunities for Gtn and Technology One

-0.54

Correlation Coefficient

Gtn  Technology One

Excellent diversification

The 3 months correlation between Gtn and Technology is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gtn and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One and Gtn 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 Gtn are associated (or correlated) with Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of Gtn i.e., Gtn and Technology One go up and down completely randomly.

Pair Corralation between Gtn and Technology One

Assuming the 90 days trading horizon Gtn is expected to generate 1.5 times more return on investment than Technology One. However, Gtn is 1.5 times more volatile than Technology One. It trades about 0.07 of its potential returns per unit of risk. Technology One is currently generating about -0.06 per unit of risk. If you would invest  57.00  in Gtn on December 23, 2024 and sell it today you would earn a total of  5.00  from holding Gtn or generate 8.77% return on investment over 90 days.

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

Gtn  vs.  Technology One

Gtn

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gtn are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gtn may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Technology One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Technology One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Technology One is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gtn and Technology One

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

The idea behind Gtn and Technology One 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.