Correlation Between G5 Entertainment and Medical Properties

Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Medical Properties 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 G5 Entertainment and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G5 Entertainment AB and Medical Properties Trust, you can compare the effects of market volatilities on G5 Entertainment and Medical Properties 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 G5 Entertainment with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Medical Properties.

Diversification Opportunities for G5 Entertainment and Medical Properties

0.53

Correlation Coefficient

G5 Entertainment  Medical Properties

Very weak diversification

The 3 months correlation between 0QUS and Medical is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment AB and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and G5 Entertainment 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 G5 Entertainment AB are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Medical Properties go up and down completely randomly.

Pair Corralation between G5 Entertainment and Medical Properties

Assuming the 90 days trading horizon G5 Entertainment is expected to generate 2.86 times less return on investment than Medical Properties. But when comparing it to its historical volatility, G5 Entertainment AB is 1.35 times less risky than Medical Properties. It trades about 0.1 of its potential returns per unit of risk. Medical Properties Trust is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  393.00  in Medical Properties Trust on December 31, 2024 and sell it today you would earn a total of  209.00  from holding Medical Properties Trust or generate 53.18% return on investment over 90 days.

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

G5 Entertainment AB  vs.  Medical Properties Trust

G5 Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G5 Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Medical Properties Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Properties Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Medical Properties unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G5 Entertainment and Medical Properties

The main advantage of trading using opposite G5 Entertainment and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' long position.

The idea behind G5 Entertainment AB and Medical Properties Trust 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.