Correlation Between GelStat Corp and Green Cures

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

By analyzing existing cross correlation between GelStat Corp and Green Cures Botanical, you can compare the effects of market volatilities on GelStat Corp and Green Cures 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 Green Cures. Check out your portfolio center. Please also check ongoing floating volatility patterns of GelStat Corp and Green Cures.

Diversification Opportunities for GelStat Corp and Green Cures

0.24

Correlation Coefficient

GelStat Corp  Green Cures

Modest diversification

The 3 months correlation between GelStat and Green is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GelStat Corp and Green Cures Botanical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cures Botanical 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 Green Cures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cures Botanical has no effect on the direction of GelStat Corp i.e., GelStat Corp and Green Cures go up and down completely randomly.

Pair Corralation between GelStat Corp and Green Cures

Given the investment horizon of 90 days GelStat Corp is expected to under-perform the Green Cures. But the pink sheet apears to be less risky and, when comparing its historical volatility, GelStat Corp is 6.05 times less risky than Green Cures. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Green Cures Botanical is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Green Cures Botanical on November 29, 2024 and sell it today you would lose (0.01) from holding Green Cures Botanical or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

GelStat Corp  vs.  Green Cures Botanical

GelStat Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days GelStat Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Green Cures Botanical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Cures Botanical are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Green Cures unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GelStat Corp and Green Cures

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

The idea behind GelStat Corp and Green Cures Botanical 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.