Correlation Between GMS and HIMARK

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

By analyzing existing cross correlation between GMS Inc and HIMARK 145 10 MAY 26, you can compare the effects of market volatilities on GMS and HIMARK 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 HIMARK. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and HIMARK.

Diversification Opportunities for GMS and HIMARK

-0.14

Correlation Coefficient

GMS  HIMARK

Good diversification

The 3 months correlation between GMS and HIMARK is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and HIMARK 145 10 MAY 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIMARK 145 10 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 HIMARK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIMARK 145 10 has no effect on the direction of GMS i.e., GMS and HIMARK go up and down completely randomly.

Pair Corralation between GMS and HIMARK

Considering the 90-day investment horizon GMS Inc is expected to under-perform the HIMARK. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 1.21 times less risky than HIMARK. The stock trades about -0.68 of its potential returns per unit of risk. The HIMARK 145 10 MAY 26 is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest  9,444  in HIMARK 145 10 MAY 26 on October 12, 2024 and sell it today you would lose (295.00) from holding HIMARK 145 10 MAY 26 or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.0%
Values	Daily Returns

GMS Inc  vs.  HIMARK 145 10 MAY 26

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 weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

HIMARK 145 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HIMARK 145 10 MAY 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HIMARK 145 10 MAY 26 investors.

Pair Trading with GMS and HIMARK

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

The idea behind GMS Inc and HIMARK 145 10 MAY 26 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.