Correlation Between Sushi and GMX

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

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

Diversification Opportunities for Sushi and GMX

0.66

Correlation Coefficient

Sushi  GMX

Poor diversification

The 3 months correlation between Sushi and GMX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sushi and GMX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMX and Sushi 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 Sushi are associated (or correlated) with GMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMX has no effect on the direction of Sushi i.e., Sushi and GMX go up and down completely randomly.

Pair Corralation between Sushi and GMX

Assuming the 90 days trading horizon Sushi is expected to generate 1.35 times more return on investment than GMX. However, Sushi is 1.35 times more volatile than GMX. It trades about 0.23 of its potential returns per unit of risk. GMX is currently generating about 0.1 per unit of risk. If you would invest  55.00  in Sushi on September 1, 2024 and sell it today you would earn a total of  79.00  from holding Sushi or generate 143.64% return on investment over 90 days.

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

Sushi  vs.  GMX

Sushi

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sushi are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Sushi exhibited solid returns over the last few months and may actually be approaching a breakup point.

GMX

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GMX are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, GMX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sushi and GMX

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

The idea behind Sushi and GMX 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.