Correlation Between GMO Internet and Serina Therapeutics

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

By analyzing existing cross correlation between GMO Internet and Serina Therapeutics, you can compare the effects of market volatilities on GMO Internet and Serina Therapeutics 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 GMO Internet with a short position of Serina Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Serina Therapeutics.

Diversification Opportunities for GMO Internet and Serina Therapeutics

-0.12

Correlation Coefficient

GMO Internet  Serina Therapeutics

Good diversification

The 3 months correlation between GMO and Serina is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Serina Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serina Therapeutics and GMO Internet 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 GMO Internet are associated (or correlated) with Serina Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serina Therapeutics has no effect on the direction of GMO Internet i.e., GMO Internet and Serina Therapeutics go up and down completely randomly.

Pair Corralation between GMO Internet and Serina Therapeutics

Assuming the 90 days horizon GMO Internet is expected to generate 0.26 times more return on investment than Serina Therapeutics. However, GMO Internet is 3.92 times less risky than Serina Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Serina Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  1,690  in GMO Internet on October 9, 2024 and sell it today you would lose (10.00) from holding GMO Internet or give up 0.59% of portfolio value over 90 days.

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

GMO Internet  vs.  Serina Therapeutics

GMO Internet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMO Internet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GMO Internet is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Serina Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Serina Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with GMO Internet and Serina Therapeutics

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

The idea behind GMO Internet and Serina Therapeutics 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.