Correlation Between Auto Trader and Geratherm Medical

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

By analyzing existing cross correlation between Auto Trader Group and Geratherm Medical AG, you can compare the effects of market volatilities on Auto Trader 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 Auto Trader with a short position of Geratherm Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Geratherm Medical.

Diversification Opportunities for Auto Trader and Geratherm Medical

0.04

Correlation Coefficient

Auto Trader  Geratherm Medical

Significant diversification

The 3 months correlation between Auto and Geratherm is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Geratherm Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geratherm Medical and Auto Trader 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 Auto Trader Group 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 Auto Trader i.e., Auto Trader and Geratherm Medical go up and down completely randomly.

Pair Corralation between Auto Trader and Geratherm Medical

Assuming the 90 days trading horizon Auto Trader is expected to generate 3.72 times less return on investment than Geratherm Medical. But when comparing it to its historical volatility, Auto Trader Group is 1.42 times less risky than Geratherm Medical. It trades about 0.04 of its potential returns per unit of risk. Geratherm Medical AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  286.00  in Geratherm Medical AG on April 24, 2025 and sell it today you would earn a total of  44.00  from holding Geratherm Medical AG or generate 15.38% return on investment over 90 days.

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

Auto Trader Group  vs.  Geratherm Medical AG

Auto Trader Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auto Trader Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Auto Trader is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Geratherm Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Geratherm Medical AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Geratherm Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auto Trader and Geratherm Medical

The main advantage of trading using opposite Auto Trader and Geratherm Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader 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 Auto Trader Group and Geratherm Medical AG 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.