Correlation Between GAMCO Natural and Bounce Mobile

Can any of the company-specific risk be diversified away by investing in both GAMCO Natural and Bounce Mobile 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 GAMCO Natural and Bounce Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GAMCO Natural Resources and Bounce Mobile Systems, you can compare the effects of market volatilities on GAMCO Natural and Bounce Mobile 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 GAMCO Natural with a short position of Bounce Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Natural and Bounce Mobile.

Diversification Opportunities for GAMCO Natural and Bounce Mobile

0.03

Correlation Coefficient

GAMCO Natural  Bounce Mobile

Significant diversification

The 3 months correlation between GAMCO and Bounce is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and Bounce Mobile Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bounce Mobile Systems and GAMCO Natural 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 GAMCO Natural Resources are associated (or correlated) with Bounce Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bounce Mobile Systems has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and Bounce Mobile go up and down completely randomly.

Pair Corralation between GAMCO Natural and Bounce Mobile

Considering the 90-day investment horizon GAMCO Natural is expected to generate 31.12 times less return on investment than Bounce Mobile. But when comparing it to its historical volatility, GAMCO Natural Resources is 21.57 times less risky than Bounce Mobile. It trades about 0.07 of its potential returns per unit of risk. Bounce Mobile Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.35  in Bounce Mobile Systems on September 1, 2024 and sell it today you would lose (0.15) from holding Bounce Mobile Systems or give up 6.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

GAMCO Natural Resources  vs.  Bounce Mobile Systems

GAMCO Natural Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GAMCO Natural is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Bounce Mobile Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bounce Mobile Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Bounce Mobile displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GAMCO Natural and Bounce Mobile

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

The idea behind GAMCO Natural Resources and Bounce Mobile 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.