Correlation Between National CineMedia and Gelteq Limited

Can any of the company-specific risk be diversified away by investing in both National CineMedia and Gelteq Limited 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 National CineMedia and Gelteq Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National CineMedia and Gelteq Limited Ordinary, you can compare the effects of market volatilities on National CineMedia and Gelteq Limited 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 National CineMedia with a short position of Gelteq Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Gelteq Limited.

Diversification Opportunities for National CineMedia and Gelteq Limited

0.42

Correlation Coefficient

National CineMedia  Gelteq Limited

Very weak diversification

The 3 months correlation between National and Gelteq is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Gelteq Limited Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gelteq Limited Ordinary and National CineMedia 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 National CineMedia are associated (or correlated) with Gelteq Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gelteq Limited Ordinary has no effect on the direction of National CineMedia i.e., National CineMedia and Gelteq Limited go up and down completely randomly.

Pair Corralation between National CineMedia and Gelteq Limited

Given the investment horizon of 90 days National CineMedia is expected to generate 260.41 times less return on investment than Gelteq Limited. But when comparing it to its historical volatility, National CineMedia is 7.42 times less risky than Gelteq Limited. It trades about 0.0 of its potential returns per unit of risk. Gelteq Limited Ordinary is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  294.00  in Gelteq Limited Ordinary on October 23, 2024 and sell it today you would lose (75.00) from holding Gelteq Limited Ordinary or give up 25.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.33%
Values	Daily Returns

National CineMedia  vs.  Gelteq Limited Ordinary

National CineMedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Gelteq Limited Ordinary

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gelteq Limited Ordinary are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Gelteq Limited unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National CineMedia and Gelteq Limited

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

The idea behind National CineMedia and Gelteq Limited Ordinary 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.