Correlation Between Patria Investments and GP Investments

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

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

Diversification Opportunities for Patria Investments and GP Investments

0.19

Correlation Coefficient

Patria Investments  GP Investments

Average diversification

The 3 months correlation between Patria and GPIV33 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Patria Investments Limited and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments and Patria Investments 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 Patria Investments Limited are associated (or correlated) with GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Patria Investments i.e., Patria Investments and GP Investments go up and down completely randomly.

Pair Corralation between Patria Investments and GP Investments

Assuming the 90 days trading horizon Patria Investments is expected to generate 1.1 times less return on investment than GP Investments. But when comparing it to its historical volatility, Patria Investments Limited is 2.12 times less risky than GP Investments. It trades about 0.08 of its potential returns per unit of risk. GP Investments is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  393.00  in GP Investments on October 23, 2024 and sell it today you would earn a total of  20.00  from holding GP Investments or generate 5.09% return on investment over 90 days.

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

Patria Investments Limited  vs.  GP Investments

Patria Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Patria Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GP Investments

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, GP Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Patria Investments and GP Investments

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

The idea behind Patria Investments Limited and GP Investments 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.