Correlation Between Monks Investment and GSTechnologies

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

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

Diversification Opportunities for Monks Investment and GSTechnologies

0.07

Correlation Coefficient

Monks Investment  GSTechnologies

Significant diversification

The 3 months correlation between Monks and GSTechnologies is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and GSTechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSTechnologies and Monks Investment 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 Monks Investment Trust are associated (or correlated) with GSTechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSTechnologies has no effect on the direction of Monks Investment i.e., Monks Investment and GSTechnologies go up and down completely randomly.

Pair Corralation between Monks Investment and GSTechnologies

Assuming the 90 days trading horizon Monks Investment Trust is expected to under-perform the GSTechnologies. But the stock apears to be less risky and, when comparing its historical volatility, Monks Investment Trust is 5.62 times less risky than GSTechnologies. The stock trades about -0.03 of its potential returns per unit of risk. The GSTechnologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  220.00  in GSTechnologies on December 26, 2024 and sell it today you would lose (22.00) from holding GSTechnologies or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Monks Investment Trust  vs.  GSTechnologies

Monks Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monks Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Monks Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GSTechnologies

Risk-Adjusted Performance

Weak

Over the last 90 days GSTechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GSTechnologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Monks Investment and GSTechnologies

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

The idea behind Monks Investment Trust and GSTechnologies 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.