Correlation Between Intercure and Galileo Tech

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

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

Diversification Opportunities for Intercure and Galileo Tech

0.84

Correlation Coefficient

Intercure  Galileo Tech

Very poor diversification

The 3 months correlation between Intercure and Galileo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Intercure and Galileo Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galileo Tech and Intercure 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 Intercure are associated (or correlated) with Galileo Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galileo Tech has no effect on the direction of Intercure i.e., Intercure and Galileo Tech go up and down completely randomly.

Pair Corralation between Intercure and Galileo Tech

Assuming the 90 days trading horizon Intercure is expected to under-perform the Galileo Tech. But the stock apears to be less risky and, when comparing its historical volatility, Intercure is 1.9 times less risky than Galileo Tech. The stock trades about -0.25 of its potential returns per unit of risk. The Galileo Tech is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,970  in Galileo Tech on September 16, 2024 and sell it today you would lose (690.00) from holding Galileo Tech or give up 35.03% of portfolio value over 90 days.

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

Intercure  vs.  Galileo Tech

Intercure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intercure 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.

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.

Pair Trading with Intercure and Galileo Tech

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

The idea behind Intercure and Galileo Tech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.