Correlation Between GB Sciences and Enzolytics
Can any of the company-specific risk be diversified away by investing in both GB Sciences and Enzolytics 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 GB Sciences and Enzolytics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GB Sciences and Enzolytics, you can compare the effects of market volatilities on GB Sciences and Enzolytics 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 GB Sciences with a short position of Enzolytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GB Sciences and Enzolytics.
Diversification Opportunities for GB Sciences and Enzolytics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GBLX and Enzolytics is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GB Sciences and Enzolytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enzolytics and GB Sciences 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 GB Sciences are associated (or correlated) with Enzolytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enzolytics has no effect on the direction of GB Sciences i.e., GB Sciences and Enzolytics go up and down completely randomly.
Pair Corralation between GB Sciences and Enzolytics
Given the investment horizon of 90 days GB Sciences is expected to generate 8.82 times more return on investment than Enzolytics. However, GB Sciences is 8.82 times more volatile than Enzolytics. It trades about 0.08 of its potential returns per unit of risk. Enzolytics is currently generating about -0.08 per unit of risk. If you would invest 1.08 in GB Sciences on September 2, 2024 and sell it today you would lose (0.58) from holding GB Sciences or give up 53.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
GB Sciences vs. Enzolytics
Performance |
| Timeline |
| GB Sciences |
| Enzolytics |
GB Sciences and Enzolytics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GB Sciences and Enzolytics
The main advantage of trading using opposite GB Sciences and Enzolytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GB Sciences position performs unexpectedly, Enzolytics 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 Enzolytics will offset losses from the drop in Enzolytics' long position.| GB Sciences vs. Antibe Therapeutics | GB Sciences vs. Awakn Life Sciences | GB Sciences vs. America Great Health | GB Sciences vs. Therasense |
| Enzolytics vs. Creative Medical Technology | Enzolytics vs. Regen BioPharma | Enzolytics vs. Therasense | Enzolytics vs. Sonnet Biotherapeutics Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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