Correlation Between GMS and Maison Solutions

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

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

Diversification Opportunities for GMS and Maison Solutions

-0.65

Correlation Coefficient

GMS  Maison Solutions

Excellent diversification

The 3 months correlation between GMS and Maison is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Maison Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maison Solutions 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 Maison Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maison Solutions has no effect on the direction of GMS i.e., GMS and Maison Solutions go up and down completely randomly.

Pair Corralation between GMS and Maison Solutions

Considering the 90-day investment horizon GMS Inc is expected to under-perform the Maison Solutions. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 8.02 times less risky than Maison Solutions. The stock trades about -0.12 of its potential returns per unit of risk. The Maison Solutions is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  116.00  in Maison Solutions on October 26, 2024 and sell it today you would lose (3.00) from holding Maison Solutions or give up 2.59% of portfolio value over 90 days.

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

GMS Inc  vs.  Maison Solutions

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.

Maison Solutions

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maison Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Maison Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GMS and Maison Solutions

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

The idea behind GMS Inc and Maison Solutions 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.