Correlation Between Brait SE and Gemfields

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

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

Diversification Opportunities for Brait SE and Gemfields

-0.93

Correlation Coefficient

Brait SE  Gemfields

Pay attention - limited upside

The 3 months correlation between Brait and Gemfields is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Brait SE and Gemfields Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group and Brait SE 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 Brait SE are associated (or correlated) with Gemfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Brait SE i.e., Brait SE and Gemfields go up and down completely randomly.

Pair Corralation between Brait SE and Gemfields

Assuming the 90 days trading horizon Brait SE is expected to generate 0.34 times more return on investment than Gemfields. However, Brait SE is 2.9 times less risky than Gemfields. It trades about 0.06 of its potential returns per unit of risk. Gemfields Group is currently generating about -0.15 per unit of risk. If you would invest  19,600  in Brait SE on September 24, 2024 and sell it today you would earn a total of  400.00  from holding Brait SE or generate 2.04% return on investment over 90 days.

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

Brait SE  vs.  Gemfields Group

Brait SE

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brait SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gemfields Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemfields Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Brait SE and Gemfields

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

The idea behind Brait SE and Gemfields Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.