Correlation Between Clear Blue and Gatekeeper Systems

Can any of the company-specific risk be diversified away by investing in both Clear Blue and Gatekeeper Systems 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 Clear Blue and Gatekeeper Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Clear Blue and Gatekeeper Systems

-0.34

Correlation Coefficient

Clear Blue  Gatekeeper Systems

Very good diversification

The 3 months correlation between Clear and Gatekeeper is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Clear Blue Technologies and Gatekeeper Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatekeeper Systems and Clear Blue 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 Clear Blue Technologies are associated (or correlated) with Gatekeeper Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatekeeper Systems has no effect on the direction of Clear Blue i.e., Clear Blue and Gatekeeper Systems go up and down completely randomly.

Pair Corralation between Clear Blue and Gatekeeper Systems

Assuming the 90 days trading horizon Clear Blue Technologies is expected to generate 8.55 times more return on investment than Gatekeeper Systems. However, Clear Blue is 8.55 times more volatile than Gatekeeper Systems. It trades about 0.15 of its potential returns per unit of risk. Gatekeeper Systems is currently generating about 0.13 per unit of risk. If you would invest  1.50  in Clear Blue Technologies on September 20, 2024 and sell it today you would earn a total of  0.50  from holding Clear Blue Technologies or generate 33.33% return on investment over 90 days.

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

Clear Blue Technologies  vs.  Gatekeeper Systems

Clear Blue Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Blue Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Clear Blue is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Gatekeeper Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gatekeeper Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gatekeeper Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clear Blue and Gatekeeper Systems

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

The idea behind Clear Blue Technologies and Gatekeeper Systems 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.