Correlation Between GUINEA INSURANCE and INDUSTRIAL MEDICAL

Can any of the company-specific risk be diversified away by investing in both GUINEA INSURANCE and INDUSTRIAL 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 GUINEA INSURANCE and INDUSTRIAL MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GUINEA INSURANCE PLC and INDUSTRIAL MEDICAL GASES, you can compare the effects of market volatilities on GUINEA INSURANCE and INDUSTRIAL 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 GUINEA INSURANCE with a short position of INDUSTRIAL MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUINEA INSURANCE and INDUSTRIAL MEDICAL.

Diversification Opportunities for GUINEA INSURANCE and INDUSTRIAL MEDICAL

0.62

Correlation Coefficient

GUINEA INSURANCE  INDUSTRIAL MEDICAL

Poor diversification

The 3 months correlation between GUINEA and INDUSTRIAL is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GUINEA INSURANCE PLC and INDUSTRIAL MEDICAL GASES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDUSTRIAL MEDICAL GASES and GUINEA INSURANCE 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 GUINEA INSURANCE PLC are associated (or correlated) with INDUSTRIAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDUSTRIAL MEDICAL GASES has no effect on the direction of GUINEA INSURANCE i.e., GUINEA INSURANCE and INDUSTRIAL MEDICAL go up and down completely randomly.

Pair Corralation between GUINEA INSURANCE and INDUSTRIAL MEDICAL

Assuming the 90 days trading horizon GUINEA INSURANCE PLC is expected to generate 4.31 times more return on investment than INDUSTRIAL MEDICAL. However, GUINEA INSURANCE is 4.31 times more volatile than INDUSTRIAL MEDICAL GASES. It trades about 0.11 of its potential returns per unit of risk. INDUSTRIAL MEDICAL GASES is currently generating about 0.13 per unit of risk. If you would invest  47.00  in GUINEA INSURANCE PLC on September 14, 2024 and sell it today you would earn a total of  14.00  from holding GUINEA INSURANCE PLC or generate 29.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

GUINEA INSURANCE PLC  vs.  INDUSTRIAL MEDICAL GASES

GUINEA INSURANCE PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GUINEA INSURANCE PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, GUINEA INSURANCE demonstrated solid returns over the last few months and may actually be approaching a breakup point.

INDUSTRIAL MEDICAL GASES

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDUSTRIAL MEDICAL GASES are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, INDUSTRIAL MEDICAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GUINEA INSURANCE and INDUSTRIAL MEDICAL

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

The idea behind GUINEA INSURANCE PLC and INDUSTRIAL MEDICAL GASES 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.