Correlation Between G5 Entertainment and CVS Health

Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and CVS Health 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 G5 Entertainment and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G5 Entertainment AB and CVS Health Corp, you can compare the effects of market volatilities on G5 Entertainment and CVS Health 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 G5 Entertainment with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and CVS Health.

Diversification Opportunities for G5 Entertainment and CVS Health

-0.74

Correlation Coefficient

G5 Entertainment  CVS Health

Pay attention - limited upside

The 3 months correlation between 0QUS and CVS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment AB and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and G5 Entertainment 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 G5 Entertainment AB are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and CVS Health go up and down completely randomly.

Pair Corralation between G5 Entertainment and CVS Health

Assuming the 90 days trading horizon G5 Entertainment AB is expected to generate 0.93 times more return on investment than CVS Health. However, G5 Entertainment AB is 1.07 times less risky than CVS Health. It trades about 0.19 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.64 per unit of risk. If you would invest  9,900  in G5 Entertainment AB on September 24, 2024 and sell it today you would earn a total of  800.00  from holding G5 Entertainment AB or generate 8.08% return on investment over 90 days.

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

G5 Entertainment AB  vs.  CVS Health Corp

G5 Entertainment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G5 Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

CVS Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with G5 Entertainment and CVS Health

The main advantage of trading using opposite G5 Entertainment and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.

The idea behind G5 Entertainment AB and CVS Health Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.