Correlation Between Arm Holdings and Gelteq Limited

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

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

Diversification Opportunities for Arm Holdings and Gelteq Limited

0.37

Correlation Coefficient

Arm Holdings  Gelteq Limited

Weak diversification

The 3 months correlation between Arm and Gelteq is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Gelteq Limited Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gelteq Limited Ordinary and Arm Holdings 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 Arm Holdings plc are associated (or correlated) with Gelteq Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gelteq Limited Ordinary has no effect on the direction of Arm Holdings i.e., Arm Holdings and Gelteq Limited go up and down completely randomly.

Pair Corralation between Arm Holdings and Gelteq Limited

Considering the 90-day investment horizon Arm Holdings plc is expected to generate 0.68 times more return on investment than Gelteq Limited. However, Arm Holdings plc is 1.48 times less risky than Gelteq Limited. It trades about -0.02 of its potential returns per unit of risk. Gelteq Limited Ordinary is currently generating about -0.12 per unit of risk. If you would invest  13,656  in Arm Holdings plc on December 18, 2024 and sell it today you would lose (1,519) from holding Arm Holdings plc or give up 11.12% of portfolio value over 90 days.

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

Arm Holdings plc  vs.  Gelteq Limited Ordinary

Arm Holdings plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arm Holdings plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Arm Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Gelteq Limited Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gelteq Limited Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Arm Holdings and Gelteq Limited

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

The idea behind Arm Holdings plc and Gelteq Limited Ordinary 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.