Correlation Between Gobarto SA and Mercator Medical

Can any of the company-specific risk be diversified away by investing in both Gobarto SA and Mercator Medical 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 Gobarto SA and Mercator Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Gobarto SA and Mercator Medical

0.65

Correlation Coefficient

Gobarto SA  Mercator Medical

Poor diversification

The 3 months correlation between Gobarto and Mercator is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gobarto SA and Mercator Medical SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercator Medical and Gobarto SA 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 Gobarto SA are associated (or correlated) with Mercator Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercator Medical has no effect on the direction of Gobarto SA i.e., Gobarto SA and Mercator Medical go up and down completely randomly.

Pair Corralation between Gobarto SA and Mercator Medical

Assuming the 90 days trading horizon Gobarto SA is expected to generate 1.36 times more return on investment than Mercator Medical. However, Gobarto SA is 1.36 times more volatile than Mercator Medical SA. It trades about 0.03 of its potential returns per unit of risk. Mercator Medical SA is currently generating about -0.15 per unit of risk. If you would invest  3,050  in Gobarto SA on September 4, 2024 and sell it today you would earn a total of  40.00  from holding Gobarto SA or generate 1.31% return on investment over 90 days.

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

Gobarto SA  vs.  Mercator Medical SA

Gobarto SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gobarto SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Mercator Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercator Medical SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Gobarto SA and Mercator Medical

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

The idea behind Gobarto SA and Mercator Medical SA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.