Correlation Between Gaia and Reading International

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

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

Diversification Opportunities for Gaia and Reading International

0.78

Correlation Coefficient

Gaia  Reading International

Poor diversification

The 3 months correlation between Gaia and Reading is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Gaia Inc and Reading International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reading International and Gaia 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 Gaia Inc are associated (or correlated) with Reading International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reading International has no effect on the direction of Gaia i.e., Gaia and Reading International go up and down completely randomly.

Pair Corralation between Gaia and Reading International

Given the investment horizon of 90 days Gaia Inc is expected to under-perform the Reading International. But the stock apears to be less risky and, when comparing its historical volatility, Gaia Inc is 1.05 times less risky than Reading International. The stock trades about -0.03 of its potential returns per unit of risk. The Reading International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Reading International on December 28, 2024 and sell it today you would earn a total of  5.00  from holding Reading International or generate 3.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Gaia Inc  vs.  Reading International

Gaia Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gaia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Reading International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reading International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Reading International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gaia and Reading International

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

The idea behind Gaia Inc and Reading International 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .