Correlation Between GP Investments and Multilaser Industrial

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

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

Diversification Opportunities for GP Investments and Multilaser Industrial

0.35

Correlation Coefficient

GP Investments  Multilaser Industrial

Weak diversification

The 3 months correlation between GPIV33 and Multilaser is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Multilaser Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multilaser Industrial and GP Investments 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 Investments are associated (or correlated) with Multilaser Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multilaser Industrial has no effect on the direction of GP Investments i.e., GP Investments and Multilaser Industrial go up and down completely randomly.

Pair Corralation between GP Investments and Multilaser Industrial

Assuming the 90 days trading horizon GP Investments is expected to generate 1.4 times less return on investment than Multilaser Industrial. But when comparing it to its historical volatility, GP Investments is 1.68 times less risky than Multilaser Industrial. It trades about 0.02 of its potential returns per unit of risk. Multilaser Industrial SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  107.00  in Multilaser Industrial SA on April 7, 2025 and sell it today you would earn a total of  0.00  from holding Multilaser Industrial SA or generate 0.0% return on investment over 90 days.

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

GP Investments  vs.  Multilaser Industrial SA

GP Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multilaser Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multilaser Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GP Investments and Multilaser Industrial

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

The idea behind GP Investments and Multilaser Industrial 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.