Correlation Between Gemina Laboratories and Champion Iron

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

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

Diversification Opportunities for Gemina Laboratories and Champion Iron

-0.52

Correlation Coefficient

Gemina Laboratories  Champion Iron

Excellent diversification

The 3 months correlation between Gemina and Champion is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gemina Laboratories and Champion Iron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron Limited and Gemina Laboratories 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 Gemina Laboratories are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron Limited has no effect on the direction of Gemina Laboratories i.e., Gemina Laboratories and Champion Iron go up and down completely randomly.

Pair Corralation between Gemina Laboratories and Champion Iron

Assuming the 90 days horizon Gemina Laboratories is expected to generate 4.07 times more return on investment than Champion Iron. However, Gemina Laboratories is 4.07 times more volatile than Champion Iron Limited. It trades about 0.34 of its potential returns per unit of risk. Champion Iron Limited is currently generating about 0.17 per unit of risk. If you would invest  37.00  in Gemina Laboratories on October 22, 2024 and sell it today you would earn a total of  18.00  from holding Gemina Laboratories or generate 48.65% return on investment over 90 days.

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

Gemina Laboratories  vs.  Champion Iron Limited

Gemina Laboratories

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gemina Laboratories are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Gemina Laboratories reported solid returns over the last few months and may actually be approaching a breakup point.

Champion Iron Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Iron Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gemina Laboratories and Champion Iron

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

The idea behind Gemina Laboratories and Champion Iron Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.