Correlation Between GMP Property and Gigas Hosting

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

By analyzing existing cross correlation between GMP Property SOCIMI and Gigas Hosting SA, you can compare the effects of market volatilities on GMP Property and Gigas Hosting 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 GMP Property with a short position of Gigas Hosting. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMP Property and Gigas Hosting.

Diversification Opportunities for GMP Property and Gigas Hosting

0.89

Correlation Coefficient

GMP Property  Gigas Hosting

Very poor diversification

The 3 months correlation between GMP and Gigas is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding GMP Property SOCIMI and Gigas Hosting SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigas Hosting SA and GMP Property 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 GMP Property SOCIMI are associated (or correlated) with Gigas Hosting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigas Hosting SA has no effect on the direction of GMP Property i.e., GMP Property and Gigas Hosting go up and down completely randomly.

Pair Corralation between GMP Property and Gigas Hosting

Assuming the 90 days trading horizon GMP Property SOCIMI is expected to generate 1.0 times more return on investment than Gigas Hosting. However, GMP Property SOCIMI is 1.0 times less risky than Gigas Hosting. It trades about 0.12 of its potential returns per unit of risk. Gigas Hosting SA is currently generating about 0.1 per unit of risk. If you would invest  5,650  in GMP Property SOCIMI on September 5, 2024 and sell it today you would earn a total of  950.00  from holding GMP Property SOCIMI or generate 16.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

GMP Property SOCIMI  vs.  Gigas Hosting SA

GMP Property SOCIMI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GMP Property SOCIMI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, GMP Property exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gigas Hosting SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gigas Hosting SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Gigas Hosting exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GMP Property and Gigas Hosting

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

The idea behind GMP Property SOCIMI and Gigas Hosting SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.