Correlation Between Southern Petrochemicals and GPT Healthcare

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

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

Diversification Opportunities for Southern Petrochemicals and GPT Healthcare

0.44

Correlation Coefficient

Southern Petrochemicals  GPT Healthcare

Very weak diversification

The 3 months correlation between Southern and GPT is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Southern Petrochemicals Indust and GPT Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Healthcare and Southern Petrochemicals 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 Southern Petrochemicals Industries 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 Southern Petrochemicals i.e., Southern Petrochemicals and GPT Healthcare go up and down completely randomly.

Pair Corralation between Southern Petrochemicals and GPT Healthcare

Assuming the 90 days trading horizon Southern Petrochemicals Industries is expected to generate 0.97 times more return on investment than GPT Healthcare. However, Southern Petrochemicals Industries is 1.03 times less risky than GPT Healthcare. It trades about 0.02 of its potential returns per unit of risk. GPT Healthcare is currently generating about 0.0 per unit of risk. If you would invest  6,808  in Southern Petrochemicals Industries on September 28, 2024 and sell it today you would earn a total of  666.00  from holding Southern Petrochemicals Industries or generate 9.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.47%
Values	Daily Returns

Southern Petrochemicals Indust  vs.  GPT Healthcare

Southern Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Petrochemicals Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

GPT Healthcare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GPT Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Southern Petrochemicals and GPT Healthcare

The main advantage of trading using opposite Southern Petrochemicals and GPT Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Petrochemicals 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 Southern Petrochemicals Industries 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..