Correlation Between GP Investments and METISA Metalrgica

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

By analyzing existing cross correlation between GP Investments and METISA Metalrgica Timboense, you can compare the effects of market volatilities on GP Investments and METISA Metalrgica 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 METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and METISA Metalrgica.

Diversification Opportunities for GP Investments and METISA Metalrgica

-0.38

Correlation Coefficient

GP Investments  METISA Metalrgica

Very good diversification

The 3 months correlation between GPIV33 and METISA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica 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 METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of GP Investments i.e., GP Investments and METISA Metalrgica go up and down completely randomly.

Pair Corralation between GP Investments and METISA Metalrgica

Assuming the 90 days trading horizon GP Investments is expected to under-perform the METISA Metalrgica. But the stock apears to be less risky and, when comparing its historical volatility, GP Investments is 1.05 times less risky than METISA Metalrgica. The stock trades about -0.08 of its potential returns per unit of risk. The METISA Metalrgica Timboense is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,937  in METISA Metalrgica Timboense on April 20, 2025 and sell it today you would earn a total of  430.00  from holding METISA Metalrgica Timboense or generate 10.92% return on investment over 90 days.

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

GP Investments  vs.  METISA Metalrgica Timboense

GP Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days GP Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

METISA Metalrgica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with GP Investments and METISA Metalrgica

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

The idea behind GP Investments and METISA Metalrgica Timboense 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.