Correlation Between Transport and GPT Healthcare

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

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

Diversification Opportunities for Transport and GPT Healthcare

0.83

Correlation Coefficient

Transport  GPT Healthcare

Very poor diversification

The 3 months correlation between Transport and GPT is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Transport of and GPT Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Healthcare and Transport 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 Transport of 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 Transport i.e., Transport and GPT Healthcare go up and down completely randomly.

Pair Corralation between Transport and GPT Healthcare

Assuming the 90 days trading horizon Transport of is expected to generate 1.04 times more return on investment than GPT Healthcare. However, Transport is 1.04 times more volatile than GPT Healthcare. It trades about -0.01 of its potential returns per unit of risk. GPT Healthcare is currently generating about -0.16 per unit of risk. If you would invest  113,261  in Transport of on December 25, 2024 and sell it today you would lose (3,536) from holding Transport of or give up 3.12% of portfolio value over 90 days.

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

Transport of  vs.  GPT Healthcare

Transport

Risk-Adjusted Performance

Very Weak

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

GPT Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days GPT Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Transport and GPT Healthcare

The main advantage of trading using opposite Transport and GPT Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport 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 Transport of 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.