Correlation Between Gear4music (Holdings) and Infrastrutture Wireless

Can any of the company-specific risk be diversified away by investing in both Gear4music (Holdings) and Infrastrutture Wireless 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 Gear4music (Holdings) and Infrastrutture Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gear4music Plc and Infrastrutture Wireless Italiane, you can compare the effects of market volatilities on Gear4music (Holdings) and Infrastrutture Wireless 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 Gear4music (Holdings) with a short position of Infrastrutture Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear4music (Holdings) and Infrastrutture Wireless.

Diversification Opportunities for Gear4music (Holdings) and Infrastrutture Wireless

-0.15

Correlation Coefficient

Gear4music (Holdings)  Infrastrutture Wireless

Good diversification

The 3 months correlation between Gear4music and Infrastrutture is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gear4music Plc and Infrastrutture Wireless Italia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastrutture Wireless and Gear4music (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 Gear4music Plc are associated (or correlated) with Infrastrutture Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastrutture Wireless has no effect on the direction of Gear4music (Holdings) i.e., Gear4music (Holdings) and Infrastrutture Wireless go up and down completely randomly.

Pair Corralation between Gear4music (Holdings) and Infrastrutture Wireless

Assuming the 90 days trading horizon Gear4music Plc is expected to under-perform the Infrastrutture Wireless. But the stock apears to be less risky and, when comparing its historical volatility, Gear4music Plc is 1.08 times less risky than Infrastrutture Wireless. The stock trades about -0.19 of its potential returns per unit of risk. The Infrastrutture Wireless Italiane is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  997.00  in Infrastrutture Wireless Italiane on December 4, 2024 and sell it today you would lose (29.00) from holding Infrastrutture Wireless Italiane or give up 2.91% of portfolio value over 90 days.

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

Gear4music Plc  vs.  Infrastrutture Wireless Italia

Gear4music (Holdings)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gear4music Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Infrastrutture Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Infrastrutture Wireless is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gear4music (Holdings) and Infrastrutture Wireless

The main advantage of trading using opposite Gear4music (Holdings) and Infrastrutture Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear4music (Holdings) position performs unexpectedly, Infrastrutture Wireless 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 Infrastrutture Wireless will offset losses from the drop in Infrastrutture Wireless' long position.

The idea behind Gear4music Plc and Infrastrutture Wireless Italiane 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.