Correlation Between Gemina Laboratories and Vecima Networks

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

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

Diversification Opportunities for Gemina Laboratories and Vecima Networks

-0.81

Correlation Coefficient

Gemina Laboratories  Vecima Networks

Pay attention - limited upside

The 3 months correlation between Gemina and Vecima is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gemina Laboratories and Vecima Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vecima Networks 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 Vecima Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vecima Networks has no effect on the direction of Gemina Laboratories i.e., Gemina Laboratories and Vecima Networks go up and down completely randomly.

Pair Corralation between Gemina Laboratories and Vecima Networks

Assuming the 90 days horizon Gemina Laboratories is expected to generate 3.41 times more return on investment than Vecima Networks. However, Gemina Laboratories is 3.41 times more volatile than Vecima Networks. It trades about -0.03 of its potential returns per unit of risk. Vecima Networks is currently generating about -0.45 per unit of risk. If you would invest  49.00  in Gemina Laboratories on September 22, 2024 and sell it today you would lose (5.00) from holding Gemina Laboratories or give up 10.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Gemina Laboratories  vs.  Vecima Networks

Gemina Laboratories

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gemina Laboratories are ranked lower than 6 (%) 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.

Vecima Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vecima Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gemina Laboratories and Vecima Networks

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

The idea behind Gemina Laboratories and Vecima Networks 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.

Check out your portfolio center.

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.