Correlation Between Gemina Laboratories and Natera

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

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

Diversification Opportunities for Gemina Laboratories and Natera

0.89

Correlation Coefficient

Gemina Laboratories  Natera

Very poor diversification

The 3 months correlation between Gemina and Natera is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gemina Laboratories and Natera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natera Inc 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 Natera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natera Inc has no effect on the direction of Gemina Laboratories i.e., Gemina Laboratories and Natera go up and down completely randomly.

Pair Corralation between Gemina Laboratories and Natera

Assuming the 90 days horizon Gemina Laboratories is expected to generate 2.32 times more return on investment than Natera. However, Gemina Laboratories is 2.32 times more volatile than Natera Inc. It trades about 0.05 of its potential returns per unit of risk. Natera Inc is currently generating about 0.11 per unit of risk. If you would invest  40.00  in Gemina Laboratories on September 27, 2024 and sell it today you would earn a total of  6.00  from holding Gemina Laboratories or generate 15.0% return on investment over 90 days.

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

Gemina Laboratories  vs.  Natera Inc

Gemina Laboratories

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gemina Laboratories are ranked lower than 7 (%) 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.

Natera Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Natera sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gemina Laboratories and Natera

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

The idea behind Gemina Laboratories and Natera Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.