Correlation Between GS Chain and TP ICAP

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

By analyzing existing cross correlation between GS Chain PLC and TP ICAP Group, you can compare the effects of market volatilities on GS Chain and TP ICAP 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 GS Chain with a short position of TP ICAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Chain and TP ICAP.

Diversification Opportunities for GS Chain and TP ICAP

-0.32

Correlation Coefficient

GS Chain  TP ICAP

Very good diversification

The 3 months correlation between GSC and TCAP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GS Chain PLC and TP ICAP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TP ICAP Group and GS Chain 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 GS Chain PLC are associated (or correlated) with TP ICAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TP ICAP Group has no effect on the direction of GS Chain i.e., GS Chain and TP ICAP go up and down completely randomly.

Pair Corralation between GS Chain and TP ICAP

Assuming the 90 days trading horizon GS Chain PLC is expected to generate 102.43 times more return on investment than TP ICAP. However, GS Chain is 102.43 times more volatile than TP ICAP Group. It trades about 0.11 of its potential returns per unit of risk. TP ICAP Group is currently generating about 0.3 per unit of risk. If you would invest  60.00  in GS Chain PLC on April 22, 2025 and sell it today you would lose (15.00) from holding GS Chain PLC or give up 25.0% of portfolio value over 90 days.

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

GS Chain PLC  vs.  TP ICAP Group

GS Chain PLC

Risk-Adjusted Performance

OK

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

TP ICAP Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TP ICAP Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, TP ICAP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GS Chain and TP ICAP

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

The idea behind GS Chain PLC and TP ICAP Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.