Correlation Between Procaps Group and GelStat Corp

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

By analyzing existing cross correlation between Procaps Group SA and GelStat Corp, you can compare the effects of market volatilities on Procaps Group and GelStat Corp 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 Procaps Group with a short position of GelStat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procaps Group and GelStat Corp.

Diversification Opportunities for Procaps Group and GelStat Corp

-0.06

Correlation Coefficient

Procaps Group  GelStat Corp

Good diversification

The 3 months correlation between Procaps and GelStat is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Procaps Group SA and GelStat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GelStat Corp and Procaps Group 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 Procaps Group SA are associated (or correlated) with GelStat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GelStat Corp has no effect on the direction of Procaps Group i.e., Procaps Group and GelStat Corp go up and down completely randomly.

Pair Corralation between Procaps Group and GelStat Corp

Given the investment horizon of 90 days Procaps Group is expected to generate 1.3 times less return on investment than GelStat Corp. In addition to that, Procaps Group is 1.01 times more volatile than GelStat Corp. It trades about 0.05 of its total potential returns per unit of risk. GelStat Corp is currently generating about 0.06 per unit of volatility. If you would invest  0.05  in GelStat Corp on September 3, 2024 and sell it today you would lose (0.01) from holding GelStat Corp or give up 20.0% of portfolio value over 90 days.

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

Procaps Group SA  vs.  GelStat Corp

Procaps Group SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Procaps Group SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Procaps Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Procaps Group and GelStat Corp

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

The idea behind Procaps Group SA and GelStat Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.