Correlation Between Kits Eyecare and GDI Integrated

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

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

Diversification Opportunities for Kits Eyecare and GDI Integrated

-0.24

Correlation Coefficient

Kits Eyecare  GDI Integrated

Very good diversification

The 3 months correlation between Kits and GDI is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kits Eyecare and GDI Integrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDI Integrated and Kits Eyecare 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 Kits Eyecare are associated (or correlated) with GDI Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDI Integrated has no effect on the direction of Kits Eyecare i.e., Kits Eyecare and GDI Integrated go up and down completely randomly.

Pair Corralation between Kits Eyecare and GDI Integrated

Assuming the 90 days trading horizon Kits Eyecare is expected to under-perform the GDI Integrated. In addition to that, Kits Eyecare is 2.15 times more volatile than GDI Integrated. It trades about -0.11 of its total potential returns per unit of risk. GDI Integrated is currently generating about 0.2 per unit of volatility. If you would invest  3,625  in GDI Integrated on September 25, 2024 and sell it today you would earn a total of  145.00  from holding GDI Integrated or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Kits Eyecare  vs.  GDI Integrated

Kits Eyecare

Risk-Adjusted Performance

0 of 100

Very Weak

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

GDI Integrated

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, GDI Integrated is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kits Eyecare and GDI Integrated

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

The idea behind Kits Eyecare and GDI Integrated 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.