Correlation Between Gemina Laboratories and Middlebury National

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

By analyzing existing cross correlation between Gemina Laboratories and Middlebury National, you can compare the effects of market volatilities on Gemina Laboratories and Middlebury National 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 Middlebury National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemina Laboratories and Middlebury National.

Diversification Opportunities for Gemina Laboratories and Middlebury National

0.73

Correlation Coefficient

Gemina Laboratories  Middlebury National

Poor diversification

The 3 months correlation between Gemina and Middlebury is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gemina Laboratories and Middlebury National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlebury National 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 Middlebury National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlebury National has no effect on the direction of Gemina Laboratories i.e., Gemina Laboratories and Middlebury National go up and down completely randomly.

Pair Corralation between Gemina Laboratories and Middlebury National

Assuming the 90 days horizon Gemina Laboratories is expected to generate 1.52 times less return on investment than Middlebury National. In addition to that, Gemina Laboratories is 4.24 times more volatile than Middlebury National. It trades about 0.05 of its total potential returns per unit of risk. Middlebury National is currently generating about 0.34 per unit of volatility. If you would invest  2,451  in Middlebury National on September 26, 2024 and sell it today you would earn a total of  1,049  from holding Middlebury National or generate 42.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

Gemina Laboratories  vs.  Middlebury National

Gemina Laboratories

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gemina Laboratories are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Gemina Laboratories reported solid returns over the last few months and may actually be approaching a breakup point.

Middlebury National

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Middlebury National are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Middlebury National unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gemina Laboratories and Middlebury National

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

The idea behind Gemina Laboratories and Middlebury National 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.