Correlation Between Graham Holdings and GP Strategies

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

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

Diversification Opportunities for Graham Holdings and GP Strategies

0.0

Correlation Coefficient

Graham Holdings  GP Strategies

Pay attention - limited upside

The 3 months correlation between Graham and GPX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and GP Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Strategies and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with GP Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Strategies has no effect on the direction of Graham Holdings i.e., Graham Holdings and GP Strategies go up and down completely randomly.

Pair Corralation between Graham Holdings and GP Strategies

If you would invest  66,137  in Graham Holdings Co on January 29, 2024 and sell it today you would earn a total of  5,645  from holding Graham Holdings Co or generate 8.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Graham Holdings Co  vs.  GP Strategies

Graham Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graham Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Graham Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

GP Strategies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GP Strategies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GP Strategies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Graham Holdings and GP Strategies

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

The idea behind Graham Holdings Co and GP Strategies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.