Correlation Between GMX and CEL

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

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

Diversification Opportunities for GMX and CEL

0.4

Correlation Coefficient

GMX  CEL

Very weak diversification

The 3 months correlation between GMX and CEL is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GMX and CEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEL and GMX 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 GMX are associated (or correlated) with CEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEL has no effect on the direction of GMX i.e., GMX and CEL go up and down completely randomly.

Pair Corralation between GMX and CEL

Assuming the 90 days trading horizon GMX is expected to under-perform the CEL. But the crypto coin apears to be less risky and, when comparing its historical volatility, GMX is 4.25 times less risky than CEL. The crypto coin trades about -0.13 of its potential returns per unit of risk. The CEL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  19.00  in CEL on December 28, 2024 and sell it today you would lose (9.00) from holding CEL or give up 47.37% of portfolio value over 90 days.

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

GMX  vs.  CEL

GMX

Risk-Adjusted Performance

Very Weak

Over the last 90 days GMX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for GMX shareholders.

CEL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CEL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, CEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GMX and CEL

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

The idea behind GMX and CEL 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.