Correlation Between GelStat Corp and Mallinckrodt Plc

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

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

Diversification Opportunities for GelStat Corp and Mallinckrodt Plc

0.0

Correlation Coefficient

GelStat Corp  Mallinckrodt Plc

Pay attention - limited upside

The 3 months correlation between GelStat and Mallinckrodt is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GelStat Corp and Mallinckrodt Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mallinckrodt Plc 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 Mallinckrodt Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mallinckrodt Plc has no effect on the direction of GelStat Corp i.e., GelStat Corp and Mallinckrodt Plc go up and down completely randomly.

Pair Corralation between GelStat Corp and Mallinckrodt Plc

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	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

GelStat Corp  vs.  Mallinckrodt Plc

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.

Mallinckrodt Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mallinckrodt Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mallinckrodt Plc is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with GelStat Corp and Mallinckrodt Plc

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

The idea behind GelStat Corp and Mallinckrodt Plc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.