Correlation Between Waters and Galecto

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

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

Diversification Opportunities for Waters and Galecto

0.06

Correlation Coefficient

Waters  Galecto

Significant diversification

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

Pair Corralation between Waters and Galecto

Considering the 90-day investment horizon Waters is expected to generate 0.32 times more return on investment than Galecto. However, Waters is 3.12 times less risky than Galecto. It trades about -0.02 of its potential returns per unit of risk. Galecto is currently generating about -0.06 per unit of risk. If you would invest  38,710  in Waters on December 1, 2024 and sell it today you would lose (976.00) from holding Waters or give up 2.52% of portfolio value over 90 days.

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

Waters  vs.  Galecto

Waters

Risk-Adjusted Performance

Very Weak

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

Galecto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galecto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Waters and Galecto

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

The idea behind Waters and Galecto 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.