Correlation Between GABY and High Tide

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

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

Diversification Opportunities for GABY and High Tide

0.0

Correlation Coefficient

GABY  High Tide

Pay attention - limited upside

The 3 months correlation between GABY and High is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GABY Inc and High Tide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tide and GABY 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 GABY Inc are associated (or correlated) with High Tide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tide has no effect on the direction of GABY i.e., GABY and High Tide go up and down completely randomly.

Pair Corralation between GABY and High Tide

Assuming the 90 days horizon GABY Inc is expected to generate 7.02 times more return on investment than High Tide. However, GABY is 7.02 times more volatile than High Tide. It trades about 0.08 of its potential returns per unit of risk. High Tide is currently generating about 0.04 per unit of risk. If you would invest  0.84  in GABY Inc on August 27, 2024 and sell it today you would lose (0.70) from holding GABY Inc or give up 83.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	86.29%
Values	Daily Returns

GABY Inc  vs.  High Tide

GABY Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GABY Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, GABY is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

High Tide

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in High Tide are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, High Tide demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GABY and High Tide

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

The idea behind GABY Inc and High Tide 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.