Correlation Between Galileo Tech and Veridis Environment

Can any of the company-specific risk be diversified away by investing in both Galileo Tech and Veridis Environment 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 Galileo Tech and Veridis Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Galileo Tech and Veridis Environment, you can compare the effects of market volatilities on Galileo Tech and Veridis Environment 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 Galileo Tech with a short position of Veridis Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galileo Tech and Veridis Environment.

Diversification Opportunities for Galileo Tech and Veridis Environment

-0.82

Correlation Coefficient

Galileo Tech  Veridis Environment

Pay attention - limited upside

The 3 months correlation between Galileo and Veridis is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Galileo Tech and Veridis Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veridis Environment and Galileo Tech 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 Galileo Tech are associated (or correlated) with Veridis Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veridis Environment has no effect on the direction of Galileo Tech i.e., Galileo Tech and Veridis Environment go up and down completely randomly.

Pair Corralation between Galileo Tech and Veridis Environment

Assuming the 90 days trading horizon Galileo Tech is expected to under-perform the Veridis Environment. In addition to that, Galileo Tech is 2.76 times more volatile than Veridis Environment. It trades about -0.12 of its total potential returns per unit of risk. Veridis Environment is currently generating about 0.21 per unit of volatility. If you would invest  197,100  in Veridis Environment on September 15, 2024 and sell it today you would earn a total of  46,500  from holding Veridis Environment or generate 23.59% return on investment over 90 days.

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

Galileo Tech  vs.  Veridis Environment

Galileo Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galileo Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Veridis Environment

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veridis Environment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Veridis Environment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galileo Tech and Veridis Environment

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

The idea behind Galileo Tech and Veridis Environment 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.

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 CEOs Directory module to screen CEOs from public companies around the world.