Correlation Between Regis Healthcare and Galan Lithium

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

By analyzing existing cross correlation between Regis Healthcare and Galan Lithium, you can compare the effects of market volatilities on Regis Healthcare and Galan Lithium 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 Regis Healthcare with a short position of Galan Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regis Healthcare and Galan Lithium.

Diversification Opportunities for Regis Healthcare and Galan Lithium

-0.11

Correlation Coefficient

Regis Healthcare  Galan Lithium

Good diversification

The 3 months correlation between Regis and Galan is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Regis Healthcare and Galan Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galan Lithium and Regis Healthcare 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 Regis Healthcare are associated (or correlated) with Galan Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galan Lithium has no effect on the direction of Regis Healthcare i.e., Regis Healthcare and Galan Lithium go up and down completely randomly.

Pair Corralation between Regis Healthcare and Galan Lithium

Assuming the 90 days trading horizon Regis Healthcare is expected to under-perform the Galan Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Regis Healthcare is 2.86 times less risky than Galan Lithium. The stock trades about -0.03 of its potential returns per unit of risk. The Galan Lithium is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Galan Lithium on October 9, 2024 and sell it today you would lose (1.00) from holding Galan Lithium or give up 6.67% of portfolio value over 90 days.

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

Regis Healthcare  vs.  Galan Lithium

Regis Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regis Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Regis Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Galan Lithium

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Regis Healthcare and Galan Lithium

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

The idea behind Regis Healthcare and Galan Lithium 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.