Correlation Between Gelteq Limited and Cyclo Therapeutics

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

By analyzing existing cross correlation between Gelteq Limited Ordinary and Cyclo Therapeutics, you can compare the effects of market volatilities on Gelteq Limited and Cyclo Therapeutics 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 Gelteq Limited with a short position of Cyclo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gelteq Limited and Cyclo Therapeutics.

Diversification Opportunities for Gelteq Limited and Cyclo Therapeutics

0.22

Correlation Coefficient

Gelteq Limited  Cyclo Therapeutics

Modest diversification

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

Pair Corralation between Gelteq Limited and Cyclo Therapeutics

Given the investment horizon of 90 days Gelteq Limited Ordinary is expected to under-perform the Cyclo Therapeutics. In addition to that, Gelteq Limited is 1.93 times more volatile than Cyclo Therapeutics. It trades about -0.13 of its total potential returns per unit of risk. Cyclo Therapeutics is currently generating about -0.02 per unit of volatility. If you would invest  72.00  in Cyclo Therapeutics on September 3, 2024 and sell it today you would lose (8.00) from holding Cyclo Therapeutics or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	37.5%
Values	Daily Returns

Gelteq Limited Ordinary  vs.  Cyclo Therapeutics

Gelteq Limited Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gelteq Limited Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cyclo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclo Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Cyclo Therapeutics is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Gelteq Limited and Cyclo Therapeutics

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

The idea behind Gelteq Limited Ordinary and Cyclo Therapeutics 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.