Correlation Between Global Health and GPT Healthcare

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

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

Diversification Opportunities for Global Health and GPT Healthcare

0.26

Correlation Coefficient

Global Health  GPT Healthcare

Modest diversification

The 3 months correlation between Global and GPT is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global Health Limited and GPT Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Healthcare and Global Health 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 Global Health Limited are associated (or correlated) with GPT Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Healthcare has no effect on the direction of Global Health i.e., Global Health and GPT Healthcare go up and down completely randomly.

Pair Corralation between Global Health and GPT Healthcare

Assuming the 90 days trading horizon Global Health Limited is expected to under-perform the GPT Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Global Health Limited is 1.21 times less risky than GPT Healthcare. The stock trades about -0.03 of its potential returns per unit of risk. The GPT Healthcare is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  18,528  in GPT Healthcare on August 31, 2024 and sell it today you would lose (637.00) from holding GPT Healthcare or give up 3.44% of portfolio value over 90 days.

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

Global Health Limited  vs.  GPT Healthcare

Global Health Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Health Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Global Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GPT Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Global Health and GPT Healthcare

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

The idea behind Global Health Limited and GPT Healthcare 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..