Correlation Between Perma Fix and GEO

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

By analyzing existing cross correlation between Perma Fix Environmental Services and The GEO Group, you can compare the effects of market volatilities on Perma Fix and GEO 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 Perma Fix with a short position of GEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma Fix and GEO.

Diversification Opportunities for Perma Fix and GEO

0.64

Correlation Coefficient

Perma Fix  GEO

Poor diversification

The 3 months correlation between Perma and GEO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic and The GEO Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEO Group and Perma Fix 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 Perma Fix Environmental Services are associated (or correlated) with GEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEO Group has no effect on the direction of Perma Fix i.e., Perma Fix and GEO go up and down completely randomly.

Pair Corralation between Perma Fix and GEO

Assuming the 90 days trading horizon Perma Fix Environmental Services is expected to under-perform the GEO. In addition to that, Perma Fix is 1.42 times more volatile than The GEO Group. It trades about -0.17 of its total potential returns per unit of risk. The GEO Group is currently generating about 0.11 per unit of volatility. If you would invest  2,482  in The GEO Group on September 12, 2024 and sell it today you would earn a total of  183.00  from holding The GEO Group or generate 7.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Perma Fix Environmental Servic  vs.  The GEO Group

Perma Fix Environmental

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Fix Environmental Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Perma Fix reported solid returns over the last few months and may actually be approaching a breakup point.

GEO Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The GEO Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GEO reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perma Fix and GEO

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

The idea behind Perma Fix Environmental Services and The GEO Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.