Correlation Between GelStat Corp and Premier Biomedical

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

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

Diversification Opportunities for GelStat Corp and Premier Biomedical

-0.08

Correlation Coefficient

GelStat Corp  Premier Biomedical

Good diversification

The 3 months correlation between GelStat and Premier is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding GelStat Corp and Premier Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Biomedical and GelStat Corp 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 GelStat Corp are associated (or correlated) with Premier Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Biomedical has no effect on the direction of GelStat Corp i.e., GelStat Corp and Premier Biomedical go up and down completely randomly.

Pair Corralation between GelStat Corp and Premier Biomedical

Given the investment horizon of 90 days GelStat Corp is expected to generate 1.58 times more return on investment than Premier Biomedical. However, GelStat Corp is 1.58 times more volatile than Premier Biomedical. It trades about 0.06 of its potential returns per unit of risk. Premier Biomedical is currently generating about -0.03 per unit of risk. If you would invest  0.05  in GelStat Corp on September 2, 2024 and sell it today you would lose (0.01) from holding GelStat Corp or give up 20.0% of portfolio value over 90 days.

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

GelStat Corp  vs.  Premier Biomedical

GelStat Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GelStat Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, GelStat Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Premier Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with GelStat Corp and Premier Biomedical

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

The idea behind GelStat Corp and Premier Biomedical 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.