Correlation Between CLS Holdings and GelStat Corp

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

By analyzing existing cross correlation between CLS Holdings USA and GelStat Corp, you can compare the effects of market volatilities on CLS Holdings and GelStat Corp 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 CLS Holdings with a short position of GelStat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLS Holdings and GelStat Corp.

Diversification Opportunities for CLS Holdings and GelStat Corp

0.22

Correlation Coefficient

CLS Holdings  GelStat Corp

Modest diversification

The 3 months correlation between CLS and GelStat is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CLS Holdings USA and GelStat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GelStat Corp and CLS 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 CLS Holdings USA are associated (or correlated) with GelStat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GelStat Corp has no effect on the direction of CLS Holdings i.e., CLS Holdings and GelStat Corp go up and down completely randomly.

Pair Corralation between CLS Holdings and GelStat Corp

Given the investment horizon of 90 days CLS Holdings USA is expected to generate 2.19 times more return on investment than GelStat Corp. However, CLS Holdings is 2.19 times more volatile than GelStat Corp. It trades about -0.03 of its potential returns per unit of risk. GelStat Corp is currently generating about -0.22 per unit of risk. If you would invest  3.83  in CLS Holdings USA on October 11, 2024 and sell it today you would lose (0.80) from holding CLS Holdings USA or give up 20.89% of portfolio value over 90 days.

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

CLS Holdings USA  vs.  GelStat Corp

CLS Holdings USA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CLS Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GelStat Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GelStat Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, GelStat Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CLS Holdings and GelStat Corp

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

The idea behind CLS Holdings USA and GelStat Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..