Correlation Between GelStat Corp and TransGlobal Assets

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

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

Diversification Opportunities for GelStat Corp and TransGlobal Assets

-0.32

Correlation Coefficient

GelStat Corp  TransGlobal Assets

Very good diversification

The 3 months correlation between GelStat and TransGlobal is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GelStat Corp and TransGlobal Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransGlobal Assets 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 TransGlobal Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransGlobal Assets has no effect on the direction of GelStat Corp i.e., GelStat Corp and TransGlobal Assets go up and down completely randomly.

Pair Corralation between GelStat Corp and TransGlobal Assets

Given the investment horizon of 90 days GelStat Corp is expected to generate 8.52 times less return on investment than TransGlobal Assets. But when comparing it to its historical volatility, GelStat Corp is 2.46 times less risky than TransGlobal Assets. It trades about 0.05 of its potential returns per unit of risk. TransGlobal Assets is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.02  in TransGlobal Assets on December 30, 2024 and sell it today you would earn a total of  0.03  from holding TransGlobal Assets or generate 150.0% return on investment over 90 days.

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

GelStat Corp  vs.  TransGlobal Assets

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.

TransGlobal Assets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TransGlobal Assets are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, TransGlobal Assets demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GelStat Corp and TransGlobal Assets

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

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