Correlation Between GFL ENVIRONM and HMS Bergbau

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Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and HMS Bergbau 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 GFL ENVIRONM and HMS Bergbau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and HMS Bergbau AG, you can compare the effects of market volatilities on GFL ENVIRONM and HMS Bergbau 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 GFL ENVIRONM with a short position of HMS Bergbau. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and HMS Bergbau.

Diversification Opportunities for GFL ENVIRONM and HMS Bergbau

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between GFL and HMS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and HMS Bergbau AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMS Bergbau AG and GFL ENVIRONM 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 GFL ENVIRONM are associated (or correlated) with HMS Bergbau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMS Bergbau AG has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and HMS Bergbau go up and down completely randomly.

Pair Corralation between GFL ENVIRONM and HMS Bergbau

Assuming the 90 days horizon GFL ENVIRONM is expected to under-perform the HMS Bergbau. In addition to that, GFL ENVIRONM is 2.67 times more volatile than HMS Bergbau AG. It trades about -0.01 of its total potential returns per unit of risk. HMS Bergbau AG is currently generating about 0.14 per unit of volatility. If you would invest  2,900  in HMS Bergbau AG on September 26, 2024 and sell it today you would earn a total of  40.00  from holding HMS Bergbau AG or generate 1.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

GFL ENVIRONM  vs.  HMS Bergbau AG

 Performance 
       Timeline  
GFL ENVIRONM 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GFL ENVIRONM are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GFL ENVIRONM reported solid returns over the last few months and may actually be approaching a breakup point.
HMS Bergbau AG 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in HMS Bergbau AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HMS Bergbau may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GFL ENVIRONM and HMS Bergbau Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GFL ENVIRONM and HMS Bergbau

The main advantage of trading using opposite GFL ENVIRONM and HMS Bergbau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, HMS Bergbau 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 HMS Bergbau will offset losses from the drop in HMS Bergbau's long position.
The idea behind GFL ENVIRONM and HMS Bergbau AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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