Correlation Between GelStat Corp and Virtual Medical

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

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

Diversification Opportunities for GelStat Corp and Virtual Medical

0.09

Correlation Coefficient

GelStat Corp  Virtual Medical

Significant diversification

The 3 months correlation between GelStat and Virtual is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding GelStat Corp and Virtual Medical International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtual Medical Inte 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 Virtual Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtual Medical Inte has no effect on the direction of GelStat Corp i.e., GelStat Corp and Virtual Medical go up and down completely randomly.

Pair Corralation between GelStat Corp and Virtual Medical

Given the investment horizon of 90 days GelStat Corp is expected to generate 1.55 times less return on investment than Virtual Medical. In addition to that, GelStat Corp is 1.35 times more volatile than Virtual Medical International. It trades about 0.06 of its total potential returns per unit of risk. Virtual Medical International is currently generating about 0.12 per unit of volatility. If you would invest  0.01  in Virtual Medical International on September 3, 2024 and sell it today you would earn a total of  0.01  from holding Virtual Medical International or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

GelStat Corp  vs.  Virtual Medical International

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 conflicting basic indicators, GelStat Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Virtual Medical Inte

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtual Medical International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, Virtual Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GelStat Corp and Virtual Medical

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

The idea behind GelStat Corp and Virtual Medical International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.