Correlation Between Medicine Man and GelStat Corp

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

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

Diversification Opportunities for Medicine Man and GelStat Corp

-0.08

Correlation Coefficient

Medicine Man  GelStat Corp

Good diversification

The 3 months correlation between Medicine and GelStat is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Medicine Man Technologies and GelStat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GelStat Corp and Medicine Man 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 Medicine Man Technologies 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 Medicine Man i.e., Medicine Man and GelStat Corp go up and down completely randomly.

Pair Corralation between Medicine Man and GelStat Corp

Given the investment horizon of 90 days Medicine Man Technologies is expected to generate 33.77 times more return on investment than GelStat Corp. However, Medicine Man is 33.77 times more volatile than GelStat Corp. It trades about 0.43 of its potential returns per unit of risk. GelStat Corp is currently generating about 0.05 per unit of risk. If you would invest  1.00  in Medicine Man Technologies on December 29, 2024 and sell it today you would lose (0.45) from holding Medicine Man Technologies or give up 45.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Medicine Man Technologies  vs.  GelStat Corp

Medicine Man Technologies

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Medicine Man Technologies are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Medicine Man showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Medicine Man and GelStat Corp

The main advantage of trading using opposite Medicine Man and GelStat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicine Man 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 Medicine Man Technologies 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.