Correlation Between Gemina Laboratories and New Relic

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

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

Diversification Opportunities for Gemina Laboratories and New Relic

-0.8

Correlation Coefficient

Gemina Laboratories  New Relic

Pay attention - limited upside

The 3 months correlation between Gemina and New is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gemina Laboratories and New Relic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Relic 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 New Relic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Relic has no effect on the direction of Gemina Laboratories i.e., Gemina Laboratories and New Relic go up and down completely randomly.

Pair Corralation between Gemina Laboratories and New Relic

Assuming the 90 days horizon Gemina Laboratories is expected to generate 2.58 times more return on investment than New Relic. However, Gemina Laboratories is 2.58 times more volatile than New Relic. It trades about 0.03 of its potential returns per unit of risk. New Relic is currently generating about -0.02 per unit of risk. If you would invest  53.00  in Gemina Laboratories on October 1, 2024 and sell it today you would earn a total of  2.00  from holding Gemina Laboratories or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	23.95%
Values	Daily Returns

Gemina Laboratories  vs.  New Relic

Gemina Laboratories

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gemina Laboratories are ranked lower than 10 (%) 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.

New Relic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gemina Laboratories and New Relic

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

The idea behind Gemina Laboratories and New Relic 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 Global Correlations module to find global opportunities by holding instruments from different markets.