Correlation Between Grand Vision and PureTech Health

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

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

Diversification Opportunities for Grand Vision and PureTech Health

-0.58

Correlation Coefficient

Grand Vision  PureTech Health

Excellent diversification

The 3 months correlation between Grand and PureTech is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Grand Vision Media and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc and Grand Vision 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 Grand Vision Media are associated (or correlated) with PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Grand Vision i.e., Grand Vision and PureTech Health go up and down completely randomly.

Pair Corralation between Grand Vision and PureTech Health

Assuming the 90 days trading horizon Grand Vision Media is expected to under-perform the PureTech Health. In addition to that, Grand Vision is 1.56 times more volatile than PureTech Health plc. It trades about -0.12 of its total potential returns per unit of risk. PureTech Health plc is currently generating about 0.11 per unit of volatility. If you would invest  14,640  in PureTech Health plc on September 12, 2024 and sell it today you would earn a total of  2,240  from holding PureTech Health plc or generate 15.3% return on investment over 90 days.

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

Grand Vision Media  vs.  PureTech Health plc

Grand Vision Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Vision Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PureTech Health plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, PureTech Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grand Vision and PureTech Health

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

The idea behind Grand Vision Media and PureTech Health plc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.