Correlation Between Gemina Laboratories and WashTec AG
Can any of the company-specific risk be diversified away by investing in both Gemina Laboratories and WashTec AG 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 Gemina Laboratories and WashTec AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gemina Laboratories and WashTec AG, you can compare the effects of market volatilities on Gemina Laboratories and WashTec AG 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 Gemina Laboratories with a short position of WashTec AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemina Laboratories and WashTec AG.
Diversification Opportunities for Gemina Laboratories and WashTec AG
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gemina and WashTec is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gemina Laboratories and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG and Gemina Laboratories 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 Gemina Laboratories are associated (or correlated) with WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of Gemina Laboratories i.e., Gemina Laboratories and WashTec AG go up and down completely randomly.
Pair Corralation between Gemina Laboratories and WashTec AG
Assuming the 90 days horizon Gemina Laboratories is expected to generate 2.78 times more return on investment than WashTec AG. However, Gemina Laboratories is 2.78 times more volatile than WashTec AG. It trades about 0.05 of its potential returns per unit of risk. WashTec AG is currently generating about 0.08 per unit of risk. If you would invest 22.00 in Gemina Laboratories on September 24, 2024 and sell it today you would earn a total of 22.00 from holding Gemina Laboratories or generate 100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
Gemina Laboratories vs. WashTec AG
Performance |
Timeline |
Gemina Laboratories |
WashTec AG |
Gemina Laboratories and WashTec AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gemina Laboratories and WashTec AG
The main advantage of trading using opposite Gemina Laboratories and WashTec AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gemina Laboratories position performs unexpectedly, WashTec AG 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 WashTec AG will offset losses from the drop in WashTec AG's long position.Gemina Laboratories vs. Nova Mentis Life | Gemina Laboratories vs. PsyBio Therapeutics Corp | Gemina Laboratories vs. HAVN Life Sciences | Gemina Laboratories vs. TC BioPharm plc |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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