Correlation Between GX AI and CM Hospitalar

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

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

Diversification Opportunities for GX AI and CM Hospitalar

-0.01

Correlation Coefficient

GX AI  CM Hospitalar

Good diversification

The 3 months correlation between BAIQ39 and VVEO3 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding GX AI TECH and CM Hospitalar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM Hospitalar SA and GX AI 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 GX AI TECH are associated (or correlated) with CM Hospitalar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM Hospitalar SA has no effect on the direction of GX AI i.e., GX AI and CM Hospitalar go up and down completely randomly.

Pair Corralation between GX AI and CM Hospitalar

Assuming the 90 days trading horizon GX AI TECH is expected to generate 0.27 times more return on investment than CM Hospitalar. However, GX AI TECH is 3.74 times less risky than CM Hospitalar. It trades about 0.27 of its potential returns per unit of risk. CM Hospitalar SA is currently generating about 0.04 per unit of risk. If you would invest  6,678  in GX AI TECH on September 25, 2024 and sell it today you would earn a total of  1,482  from holding GX AI TECH or generate 22.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

GX AI TECH  vs.  CM Hospitalar SA

GX AI TECH

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GX AI TECH are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, GX AI sustained solid returns over the last few months and may actually be approaching a breakup point.

CM Hospitalar SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CM Hospitalar SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CM Hospitalar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GX AI and CM Hospitalar

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

The idea behind GX AI TECH and CM Hospitalar 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.