Correlation Between Evertz Technologies and GMS

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

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

Diversification Opportunities for Evertz Technologies and GMS

0.32

Correlation Coefficient

Evertz Technologies  GMS

Weak diversification

The 3 months correlation between Evertz and GMS is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Evertz Technologies Limited and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Evertz Technologies 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 Evertz Technologies Limited are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Evertz Technologies i.e., Evertz Technologies and GMS go up and down completely randomly.

Pair Corralation between Evertz Technologies and GMS

Assuming the 90 days horizon Evertz Technologies is expected to generate 4.8 times less return on investment than GMS. In addition to that, Evertz Technologies is 1.23 times more volatile than GMS Inc. It trades about 0.01 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.08 per unit of volatility. If you would invest  7,294  in GMS Inc on January 24, 2024 and sell it today you would earn a total of  1,785  from holding GMS Inc or generate 24.47% return on investment over 90 days.

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

Evertz Technologies Limited  vs.  GMS Inc

Evertz Technologies

Risk-Adjusted Performance

0 of 100

Weak

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

GMS Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GMS Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, GMS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evertz Technologies and GMS

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

The idea behind Evertz Technologies Limited and GMS Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.