Correlation Between GMS and Orchestra BioMed

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

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

Diversification Opportunities for GMS and Orchestra BioMed

0.52

Correlation Coefficient

GMS  Orchestra BioMed

Very weak diversification

The 3 months correlation between GMS and Orchestra is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed Holdings 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 Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of GMS i.e., GMS and Orchestra BioMed go up and down completely randomly.

Pair Corralation between GMS and Orchestra BioMed

Considering the 90-day investment horizon GMS Inc is expected to under-perform the Orchestra BioMed. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 7.62 times less risky than Orchestra BioMed. The stock trades about -0.77 of its potential returns per unit of risk. The Orchestra BioMed Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  551.00  in Orchestra BioMed Holdings on October 10, 2024 and sell it today you would lose (14.00) from holding Orchestra BioMed Holdings or give up 2.54% of portfolio value over 90 days.

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

GMS Inc  vs.  Orchestra BioMed Holdings

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.

Orchestra BioMed Holdings

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orchestra BioMed Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Orchestra BioMed displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GMS and Orchestra BioMed

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

The idea behind GMS Inc and Orchestra BioMed Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.