Correlation Between Cathedral Energy and Gemina Laboratories

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

By analyzing existing cross correlation between Cathedral Energy Services and Gemina Laboratories, you can compare the effects of market volatilities on Cathedral Energy and Gemina Laboratories 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 Cathedral Energy with a short position of Gemina Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathedral Energy and Gemina Laboratories.

Diversification Opportunities for Cathedral Energy and Gemina Laboratories

0.55

Correlation Coefficient

Cathedral Energy  Gemina Laboratories

Very weak diversification

The 3 months correlation between Cathedral and Gemina is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cathedral Energy Services and Gemina Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemina Laboratories and Cathedral Energy 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 Cathedral Energy Services are associated (or correlated) with Gemina Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemina Laboratories has no effect on the direction of Cathedral Energy i.e., Cathedral Energy and Gemina Laboratories go up and down completely randomly.

Pair Corralation between Cathedral Energy and Gemina Laboratories

Assuming the 90 days horizon Cathedral Energy Services is expected to under-perform the Gemina Laboratories. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cathedral Energy Services is 2.72 times less risky than Gemina Laboratories. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Gemina Laboratories is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Gemina Laboratories on September 26, 2024 and sell it today you would earn a total of  24.00  from holding Gemina Laboratories or generate 109.09% return on investment over 90 days.

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

Cathedral Energy Services  vs.  Gemina Laboratories

Cathedral Energy Services

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cathedral Energy Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cathedral Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gemina Laboratories

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gemina Laboratories are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Gemina Laboratories reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cathedral Energy and Gemina Laboratories

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

The idea behind Cathedral Energy Services and Gemina Laboratories 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.