Correlation Between GP Global and Amot Investments

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

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

Diversification Opportunities for GP Global and Amot Investments

-0.57

Correlation Coefficient

GP Global  Amot Investments

Excellent diversification

The 3 months correlation between GPGB and Amot is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GP Global Power and Amot Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amot Investments and GP Global 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 GP Global Power are associated (or correlated) with Amot Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amot Investments has no effect on the direction of GP Global i.e., GP Global and Amot Investments go up and down completely randomly.

Pair Corralation between GP Global and Amot Investments

Assuming the 90 days trading horizon GP Global Power is expected to generate 0.31 times more return on investment than Amot Investments. However, GP Global Power is 3.26 times less risky than Amot Investments. It trades about 0.26 of its potential returns per unit of risk. Amot Investments is currently generating about -0.21 per unit of risk. If you would invest  146,000  in GP Global Power on January 30, 2024 and sell it today you would earn a total of  4,000  from holding GP Global Power or generate 2.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GP Global Power  vs.  Amot Investments

GP Global Power

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GP Global Power are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GP Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Amot Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amot Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GP Global and Amot Investments

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

The idea behind GP Global Power and Amot 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.