Correlation Between Archos and GECI International

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

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

Diversification Opportunities for Archos and GECI International

0.66

Correlation Coefficient

Archos  GECI International

Poor diversification

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

Pair Corralation between Archos and GECI International

Assuming the 90 days trading horizon Archos is expected to generate 1.12 times more return on investment than GECI International. However, Archos is 1.12 times more volatile than GECI International SA. It trades about 0.19 of its potential returns per unit of risk. GECI International SA is currently generating about 0.1 per unit of risk. If you would invest  11.00  in Archos on December 30, 2024 and sell it today you would earn a total of  11.00  from holding Archos or generate 100.0% return on investment over 90 days.

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

Archos  vs.  GECI International SA

Archos

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Archos are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Archos reported solid returns over the last few months and may actually be approaching a breakup point.

GECI International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GECI International SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, GECI International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Archos and GECI International

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

The idea behind Archos and GECI International SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.