Correlation Between GXC and EOS

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

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

Diversification Opportunities for GXC and EOS

0.73

Correlation Coefficient

GXC  EOS

Poor diversification

The 3 months correlation between GXC and EOS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding GXC and EOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOS and GXC 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 GXC are associated (or correlated) with EOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOS has no effect on the direction of GXC i.e., GXC and EOS go up and down completely randomly.

Pair Corralation between GXC and EOS

If you would invest  80.00  in EOS on September 25, 2024 and sell it today you would earn a total of  7.00  from holding EOS or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

GXC  vs.  EOS

GXC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GXC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, GXC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

EOS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EOS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, EOS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GXC and EOS

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

The idea behind GXC and EOS 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.