Correlation Between GXO Logistics and Freightos Limited

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

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

Diversification Opportunities for GXO Logistics and Freightos Limited

0.5

Correlation Coefficient

GXO Logistics  Freightos Limited

Very weak diversification

The 3 months correlation between GXO and Freightos is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding GXO Logistics and Freightos Limited Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freightos Limited and GXO Logistics 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 GXO Logistics are associated (or correlated) with Freightos Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freightos Limited has no effect on the direction of GXO Logistics i.e., GXO Logistics and Freightos Limited go up and down completely randomly.

Pair Corralation between GXO Logistics and Freightos Limited

Considering the 90-day investment horizon GXO Logistics is expected to generate 0.49 times more return on investment than Freightos Limited. However, GXO Logistics is 2.03 times less risky than Freightos Limited. It trades about -0.03 of its potential returns per unit of risk. Freightos Limited Ordinary is currently generating about -0.03 per unit of risk. If you would invest  4,314  in GXO Logistics on December 28, 2024 and sell it today you would lose (307.00) from holding GXO Logistics or give up 7.12% of portfolio value over 90 days.

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

GXO Logistics  vs.  Freightos Limited Ordinary

GXO Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days GXO Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GXO Logistics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Freightos Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Freightos Limited Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with GXO Logistics and Freightos Limited

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

The idea behind GXO Logistics and Freightos Limited Ordinary 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.