Correlation Between Perma-Fix Environmental and GLG LIFE

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

By analyzing existing cross correlation between Perma Fix Environmental Services and GLG LIFE TECH, you can compare the effects of market volatilities on Perma-Fix Environmental and GLG LIFE 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 Perma-Fix Environmental with a short position of GLG LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma-Fix Environmental and GLG LIFE.

Diversification Opportunities for Perma-Fix Environmental and GLG LIFE

0.0

Correlation Coefficient

Perma-Fix Environmental  GLG LIFE

Pay attention - limited upside

The 3 months correlation between Perma-Fix and GLG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic and GLG LIFE TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLG LIFE TECH and Perma-Fix Environmental 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 Perma Fix Environmental Services are associated (or correlated) with GLG LIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLG LIFE TECH has no effect on the direction of Perma-Fix Environmental i.e., Perma-Fix Environmental and GLG LIFE go up and down completely randomly.

Pair Corralation between Perma-Fix Environmental and GLG LIFE

Assuming the 90 days trading horizon Perma-Fix Environmental is expected to generate 13.22 times less return on investment than GLG LIFE. But when comparing it to its historical volatility, Perma Fix Environmental Services is 11.78 times less risky than GLG LIFE. It trades about 0.07 of its potential returns per unit of risk. GLG LIFE TECH is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.15  in GLG LIFE TECH on September 24, 2024 and sell it today you would earn a total of  1.85  from holding GLG LIFE TECH or generate 1233.33% return on investment over 90 days.

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

Perma Fix Environmental Servic  vs.  GLG LIFE TECH

Perma Fix Environmental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Fix Environmental Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Perma-Fix Environmental is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

GLG LIFE TECH

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Perma-Fix Environmental and GLG LIFE

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

The idea behind Perma Fix Environmental Services and GLG LIFE TECH 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.