Correlation Between GH Research and Axim Biotechnologies

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

By analyzing existing cross correlation between GH Research PLC and Axim Biotechnologies, you can compare the effects of market volatilities on GH Research and Axim Biotechnologies 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 GH Research with a short position of Axim Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GH Research and Axim Biotechnologies.

Diversification Opportunities for GH Research and Axim Biotechnologies

0.54

Correlation Coefficient

GH Research  Axim Biotechnologies

Very weak diversification

The 3 months correlation between GHRS and Axim is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding GH Research PLC and Axim Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axim Biotechnologies and GH Research 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 GH Research PLC are associated (or correlated) with Axim Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axim Biotechnologies has no effect on the direction of GH Research i.e., GH Research and Axim Biotechnologies go up and down completely randomly.

Pair Corralation between GH Research and Axim Biotechnologies

Given the investment horizon of 90 days GH Research is expected to generate 1.8 times less return on investment than Axim Biotechnologies. But when comparing it to its historical volatility, GH Research PLC is 1.47 times less risky than Axim Biotechnologies. It trades about 0.08 of its potential returns per unit of risk. Axim Biotechnologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Axim Biotechnologies on December 17, 2024 and sell it today you would earn a total of  0.10  from holding Axim Biotechnologies or generate 50.0% return on investment over 90 days.

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

GH Research PLC  vs.  Axim Biotechnologies

GH Research PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GH Research PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, GH Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

Axim Biotechnologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axim Biotechnologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Axim Biotechnologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GH Research and Axim Biotechnologies

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

The idea behind GH Research PLC and Axim Biotechnologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.