Correlation Between Gelteq Limited and INC Research

Can any of the company-specific risk be diversified away by investing in both Gelteq Limited and INC Research 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 INC Research 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 INC Research Holdings, you can compare the effects of market volatilities on Gelteq Limited and INC Research 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 INC Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gelteq Limited and INC Research.

Diversification Opportunities for Gelteq Limited and INC Research

0.04

Correlation Coefficient

Gelteq Limited  INC Research

Significant diversification

The 3 months correlation between Gelteq and INC is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gelteq Limited Ordinary and INC Research Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC Research Holdings 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 INC Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC Research Holdings has no effect on the direction of Gelteq Limited i.e., Gelteq Limited and INC Research go up and down completely randomly.

Pair Corralation between Gelteq Limited and INC Research

Given the investment horizon of 90 days Gelteq Limited Ordinary is expected to generate 3.7 times more return on investment than INC Research. However, Gelteq Limited is 3.7 times more volatile than INC Research Holdings. It trades about 0.09 of its potential returns per unit of risk. INC Research Holdings is currently generating about 0.12 per unit of risk. If you would invest  240.00  in Gelteq Limited Ordinary on October 5, 2024 and sell it today you would lose (2.00) from holding Gelteq Limited Ordinary or give up 0.83% of portfolio value over 90 days.

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

Gelteq Limited Ordinary  vs.  INC Research Holdings

Gelteq Limited Ordinary

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gelteq Limited Ordinary are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Gelteq Limited unveiled solid returns over the last few months and may actually be approaching a breakup point.

INC Research Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, INC Research is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gelteq Limited and INC Research

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

The idea behind Gelteq Limited Ordinary and INC Research Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.