Correlation Between Saratoga Investment and GSK Plc

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Can any of the company-specific risk be diversified away by investing in both Saratoga Investment and GSK Plc 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 Saratoga Investment and GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investment Corp and GSK Plc, you can compare the effects of market volatilities on Saratoga Investment and GSK Plc 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 Saratoga Investment with a short position of GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investment and GSK Plc.

Diversification Opportunities for Saratoga Investment and GSK Plc

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Saratoga and GSK is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investment Corp and GSK Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK Plc and Saratoga Investment 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 Saratoga Investment Corp are associated (or correlated) with GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK Plc has no effect on the direction of Saratoga Investment i.e., Saratoga Investment and GSK Plc go up and down completely randomly.

Pair Corralation between Saratoga Investment and GSK Plc

Considering the 90-day investment horizon Saratoga Investment Corp is expected to under-perform the GSK Plc. But the stock apears to be less risky and, when comparing its historical volatility, Saratoga Investment Corp is 2.98 times less risky than GSK Plc. The stock trades about -0.01 of its potential returns per unit of risk. The GSK Plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,108  in GSK Plc on December 29, 2023 and sell it today you would earn a total of  12.00  from holding GSK Plc or generate 0.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Saratoga Investment Corp  vs.  GSK Plc

 Performance 
       Timeline  
Saratoga Investment Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Saratoga Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
GSK Plc 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GSK Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, GSK Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Saratoga Investment and GSK Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Saratoga Investment and GSK Plc

The main advantage of trading using opposite Saratoga Investment and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investment position performs unexpectedly, GSK Plc 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 GSK Plc will offset losses from the drop in GSK Plc's long position.
The idea behind Saratoga Investment Corp and GSK Plc 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.
Check out your portfolio center.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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