Correlation Between Stockland and GPT

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

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

Diversification Opportunities for Stockland and GPT

0.83

Correlation Coefficient

Stockland  GPT

Very poor diversification

The 3 months correlation between Stockland and GPT is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Stockland and GPT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Group and Stockland 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 Stockland are associated (or correlated) with GPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Group has no effect on the direction of Stockland i.e., Stockland and GPT go up and down completely randomly.

Pair Corralation between Stockland and GPT

Assuming the 90 days horizon Stockland is expected to under-perform the GPT. In addition to that, Stockland is 1.04 times more volatile than GPT Group. It trades about -0.3 of its total potential returns per unit of risk. GPT Group is currently generating about -0.11 per unit of volatility. If you would invest  274.00  in GPT Group on September 22, 2024 and sell it today you would lose (9.00) from holding GPT Group or give up 3.28% of portfolio value over 90 days.

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

Stockland  vs.  GPT Group

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.

GPT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Group 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 Stockland and GPT

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

The idea behind Stockland and GPT Group 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.