Correlation Between GMS and CMBTECH NV

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

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

Diversification Opportunities for GMS and CMBTECH NV

-0.2

Correlation Coefficient

GMS  CMBTECH NV

Good diversification

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

Pair Corralation between GMS and CMBTECH NV

Considering the 90-day investment horizon GMS Inc is expected to generate 1.6 times more return on investment than CMBTECH NV. However, GMS is 1.6 times more volatile than CMBTECH NV. It trades about 0.17 of its potential returns per unit of risk. CMBTECH NV is currently generating about -0.03 per unit of risk. If you would invest  7,660  in GMS Inc on May 26, 2025 and sell it today you would earn a total of  3,330  from holding GMS Inc or generate 43.47% return on investment over 90 days.

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

GMS Inc  vs.  CMBTECH NV

GMS Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GMS Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, GMS unveiled solid returns over the last few months and may actually be approaching a breakup point.

CMBTECH NV

Risk-Adjusted Performance

Weakest

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

Pair Trading with GMS and CMBTECH NV

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

The idea behind GMS Inc and CMBTECH NV 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.