Correlation Between GMO Internet and Stockland

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

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

Diversification Opportunities for GMO Internet and Stockland

-0.29

Correlation Coefficient

GMO Internet  Stockland

Very good diversification

The 3 months correlation between GMO and Stockland is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland and GMO Internet 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 GMO Internet are associated (or correlated) with Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of GMO Internet i.e., GMO Internet and Stockland go up and down completely randomly.

Pair Corralation between GMO Internet and Stockland

Assuming the 90 days horizon GMO Internet is expected to generate 3.9 times more return on investment than Stockland. However, GMO Internet is 3.9 times more volatile than Stockland. It trades about 0.07 of its potential returns per unit of risk. Stockland is currently generating about 0.05 per unit of risk. If you would invest  255.00  in GMO Internet on October 4, 2024 and sell it today you would earn a total of  1,345  from holding GMO Internet or generate 527.45% return on investment over 90 days.

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

GMO Internet  vs.  Stockland

GMO Internet

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GMO Internet are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GMO Internet is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Stockland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stockland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GMO Internet and Stockland

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

The idea behind GMO Internet and Stockland 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 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.