Correlation Between Global Medical and AFC Gamma

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

By analyzing existing cross correlation between Global Medical REIT and AFC Gamma, you can compare the effects of market volatilities on Global Medical and AFC Gamma 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 Global Medical with a short position of AFC Gamma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and AFC Gamma.

Diversification Opportunities for Global Medical and AFC Gamma

0.95

Correlation Coefficient

Global Medical  AFC Gamma

Almost no diversification

The 3 months correlation between Global and AFC is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and AFC Gamma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Gamma and Global Medical 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 Global Medical REIT are associated (or correlated) with AFC Gamma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Gamma has no effect on the direction of Global Medical i.e., Global Medical and AFC Gamma go up and down completely randomly.

Pair Corralation between Global Medical and AFC Gamma

Given the investment horizon of 90 days Global Medical REIT is expected to under-perform the AFC Gamma. But the stock apears to be less risky and, when comparing its historical volatility, Global Medical REIT is 1.18 times less risky than AFC Gamma. The stock trades about -0.14 of its potential returns per unit of risk. The AFC Gamma is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  975.00  in AFC Gamma on October 21, 2024 and sell it today you would lose (113.00) from holding AFC Gamma or give up 11.59% of portfolio value over 90 days.

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

Global Medical REIT  vs.  AFC Gamma

Global Medical REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Medical REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AFC Gamma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFC Gamma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Global Medical and AFC Gamma

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

The idea behind Global Medical REIT and AFC Gamma 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.