Correlation Between GBX International and NMC Health

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

By analyzing existing cross correlation between GBX International Group and NMC Health PLC, you can compare the effects of market volatilities on GBX International and NMC 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 GBX International with a short position of NMC Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBX International and NMC Health.

Diversification Opportunities for GBX International and NMC Health

-0.36

Correlation Coefficient

GBX International  NMC Health

Very good diversification

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

Pair Corralation between GBX International and NMC Health

If you would invest  0.01  in GBX International Group on September 23, 2024 and sell it today you would earn a total of  0.01  from holding GBX International Group or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.27%
Values	Daily Returns

GBX International Group  vs.  NMC Health PLC

GBX International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GBX International Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, GBX International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NMC Health PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GBX International and NMC Health

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

The idea behind GBX International Group and NMC Health 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..