Correlation Between Gran Tierra and Uber Technologies

Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Uber Technologies 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 Gran Tierra and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gran Tierra Energy and Uber Technologies, you can compare the effects of market volatilities on Gran Tierra and Uber Technologies 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 Gran Tierra with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Uber Technologies.

Diversification Opportunities for Gran Tierra and Uber Technologies

0.36

Correlation Coefficient

Gran Tierra  Uber Technologies

Weak diversification

The 3 months correlation between Gran and Uber is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Gran Tierra 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 Gran Tierra Energy are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Gran Tierra i.e., Gran Tierra and Uber Technologies go up and down completely randomly.

Pair Corralation between Gran Tierra and Uber Technologies

Considering the 90-day investment horizon Gran Tierra is expected to generate 1.52 times less return on investment than Uber Technologies. In addition to that, Gran Tierra is 1.47 times more volatile than Uber Technologies. It trades about 0.06 of its total potential returns per unit of risk. Uber Technologies is currently generating about 0.14 per unit of volatility. If you would invest  3,796  in Uber Technologies on January 19, 2024 and sell it today you would earn a total of  3,334  from holding Uber Technologies or generate 87.83% return on investment over 90 days.

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

Gran Tierra Energy  vs.  Uber Technologies

Gran Tierra Energy

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gran Tierra Energy are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Gran Tierra exhibited solid returns over the last few months and may actually be approaching a breakup point.

Uber Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Gran Tierra and Uber Technologies

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

The idea behind Gran Tierra Energy and Uber Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.