Correlation Between SPDR Gold and GERATHERM MEDICAL

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

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

Diversification Opportunities for SPDR Gold and GERATHERM MEDICAL

0.2

Correlation Coefficient

SPDR Gold  GERATHERM MEDICAL

Modest diversification

The 3 months correlation between SPDR and GERATHERM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Mini and GERATHERM MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GERATHERM MEDICAL and SPDR Gold 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 SPDR Gold Mini are associated (or correlated) with GERATHERM MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GERATHERM MEDICAL has no effect on the direction of SPDR Gold i.e., SPDR Gold and GERATHERM MEDICAL go up and down completely randomly.

Pair Corralation between SPDR Gold and GERATHERM MEDICAL

Given the investment horizon of 90 days SPDR Gold is expected to generate 4.49 times less return on investment than GERATHERM MEDICAL. But when comparing it to its historical volatility, SPDR Gold Mini is 1.99 times less risky than GERATHERM MEDICAL. It trades about 0.05 of its potential returns per unit of risk. GERATHERM MEDICAL is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  272.00  in GERATHERM MEDICAL on May 1, 2025 and sell it today you would earn a total of  41.00  from holding GERATHERM MEDICAL or generate 15.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

SPDR Gold Mini  vs.  GERATHERM MEDICAL

SPDR Gold Mini

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Mini are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, SPDR Gold is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

GERATHERM MEDICAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GERATHERM MEDICAL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GERATHERM MEDICAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR Gold and GERATHERM MEDICAL

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

The idea behind SPDR Gold Mini and GERATHERM MEDICAL 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.