Correlation Between Laguna Resorts and GMM Grammy

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

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

Diversification Opportunities for Laguna Resorts and GMM Grammy

-0.1

Correlation Coefficient

Laguna Resorts  GMM Grammy

Good diversification

The 3 months correlation between Laguna and GMM is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Laguna Resorts Hotels and GMM Grammy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMM Grammy Public and Laguna Resorts 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 Laguna Resorts Hotels are associated (or correlated) with GMM Grammy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMM Grammy Public has no effect on the direction of Laguna Resorts i.e., Laguna Resorts and GMM Grammy go up and down completely randomly.

Pair Corralation between Laguna Resorts and GMM Grammy

Assuming the 90 days trading horizon Laguna Resorts Hotels is expected to generate 1.12 times more return on investment than GMM Grammy. However, Laguna Resorts is 1.12 times more volatile than GMM Grammy Public. It trades about 0.05 of its potential returns per unit of risk. GMM Grammy Public is currently generating about 0.01 per unit of risk. If you would invest  3,800  in Laguna Resorts Hotels on October 7, 2024 and sell it today you would earn a total of  125.00  from holding Laguna Resorts Hotels or generate 3.29% return on investment over 90 days.

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

Laguna Resorts Hotels  vs.  GMM Grammy Public

Laguna Resorts Hotels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laguna Resorts Hotels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, Laguna Resorts is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

GMM Grammy Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GMM Grammy Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GMM Grammy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Laguna Resorts and GMM Grammy

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

The idea behind Laguna Resorts Hotels and GMM Grammy Public 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.