Correlation Between GMS and ARIA Wireless

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

By analyzing existing cross correlation between GMS Inc and ARIA Wireless Systems, you can compare the effects of market volatilities on GMS and ARIA Wireless 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 GMS with a short position of ARIA Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and ARIA Wireless.

Diversification Opportunities for GMS and ARIA Wireless

0.0

Correlation Coefficient

GMS  ARIA Wireless

Pay attention - limited upside

The 3 months correlation between GMS and ARIA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and ARIA Wireless Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARIA Wireless Systems and GMS 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 GMS Inc are associated (or correlated) with ARIA Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARIA Wireless Systems has no effect on the direction of GMS i.e., GMS and ARIA Wireless go up and down completely randomly.

Pair Corralation between GMS and ARIA Wireless

If you would invest  0.01  in ARIA Wireless Systems on October 10, 2024 and sell it today you would earn a total of  0.00  from holding ARIA Wireless Systems or generate 0.0% return on investment over 90 days.

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

GMS Inc  vs.  ARIA Wireless Systems

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ARIA Wireless Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARIA Wireless Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ARIA Wireless is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GMS and ARIA Wireless

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

The idea behind GMS Inc and ARIA Wireless Systems 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.