Correlation Between GMS and BHCCN

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

By analyzing existing cross correlation between GMS Inc and BHCCN 11 30 SEP 28, you can compare the effects of market volatilities on GMS and BHCCN 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 BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and BHCCN.

Diversification Opportunities for GMS and BHCCN

0.49

Correlation Coefficient

GMS  BHCCN

Very weak diversification

The 3 months correlation between GMS and BHCCN is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and BHCCN 11 30 SEP 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 11 30 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 BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 11 30 has no effect on the direction of GMS i.e., GMS and BHCCN go up and down completely randomly.

Pair Corralation between GMS and BHCCN

Considering the 90-day investment horizon GMS Inc is expected to generate 0.44 times more return on investment than BHCCN. However, GMS Inc is 2.27 times less risky than BHCCN. It trades about -0.3 of its potential returns per unit of risk. BHCCN 11 30 SEP 28 is currently generating about -0.19 per unit of risk. If you would invest  9,998  in GMS Inc on October 9, 2024 and sell it today you would lose (1,703) from holding GMS Inc or give up 17.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.74%
Values	Daily Returns

GMS Inc  vs.  BHCCN 11 30 SEP 28

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.

BHCCN 11 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHCCN 11 30 SEP 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for BHCCN 11 30 SEP 28 investors.

Pair Trading with GMS and BHCCN

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

The idea behind GMS Inc and BHCCN 11 30 SEP 28 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 Valuation module to check real value of public entities based on technical and fundamental data.