Correlation Between GelStat Corp and Raphael Pharmaceutical

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

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

Diversification Opportunities for GelStat Corp and Raphael Pharmaceutical

0.19

Correlation Coefficient

GelStat Corp  Raphael Pharmaceutical

Average diversification

The 3 months correlation between GelStat and Raphael is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GelStat Corp and Raphael Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphael Pharmaceutical 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 Raphael Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphael Pharmaceutical has no effect on the direction of GelStat Corp i.e., GelStat Corp and Raphael Pharmaceutical go up and down completely randomly.

Pair Corralation between GelStat Corp and Raphael Pharmaceutical

Given the investment horizon of 90 days GelStat Corp is expected to generate 5.16 times less return on investment than Raphael Pharmaceutical. But when comparing it to its historical volatility, GelStat Corp is 1.25 times less risky than Raphael Pharmaceutical. It trades about 0.05 of its potential returns per unit of risk. Raphael Pharmaceutical is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Raphael Pharmaceutical on December 29, 2024 and sell it today you would earn a total of  74.00  from holding Raphael Pharmaceutical or generate 284.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

GelStat Corp  vs.  Raphael Pharmaceutical

GelStat Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GelStat Corp are ranked lower than 3 (%) 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.

Raphael Pharmaceutical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raphael Pharmaceutical are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Raphael Pharmaceutical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GelStat Corp and Raphael Pharmaceutical

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

The idea behind GelStat Corp and Raphael Pharmaceutical 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.