Correlation Between Gobarto SA and HM Inwest

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

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

Diversification Opportunities for Gobarto SA and HM Inwest

-0.55

Correlation Coefficient

Gobarto SA  HM Inwest

Excellent diversification

The 3 months correlation between Gobarto and HMI is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gobarto SA and HM Inwest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HM Inwest SA and Gobarto SA 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 Gobarto SA are associated (or correlated) with HM Inwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HM Inwest SA has no effect on the direction of Gobarto SA i.e., Gobarto SA and HM Inwest go up and down completely randomly.

Pair Corralation between Gobarto SA and HM Inwest

Assuming the 90 days trading horizon Gobarto SA is expected to under-perform the HM Inwest. But the stock apears to be less risky and, when comparing its historical volatility, Gobarto SA is 1.15 times less risky than HM Inwest. The stock trades about -0.03 of its potential returns per unit of risk. The HM Inwest SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,620  in HM Inwest SA on December 30, 2024 and sell it today you would earn a total of  230.00  from holding HM Inwest SA or generate 4.98% return on investment over 90 days.

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

Gobarto SA  vs.  HM Inwest SA

Gobarto SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gobarto SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

HM Inwest SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gobarto SA and HM Inwest

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

The idea behind Gobarto SA and HM Inwest SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.