Correlation Between TME Pharma and GECI International

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

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

Diversification Opportunities for TME Pharma and GECI International

-0.59

Correlation Coefficient

TME Pharma  GECI International

Excellent diversification

The 3 months correlation between TME and GECI is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding TME Pharma NV and GECI International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GECI International and TME Pharma 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 TME Pharma NV are associated (or correlated) with GECI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GECI International has no effect on the direction of TME Pharma i.e., TME Pharma and GECI International go up and down completely randomly.

Pair Corralation between TME Pharma and GECI International

Assuming the 90 days trading horizon TME Pharma NV is expected to generate 1.97 times more return on investment than GECI International. However, TME Pharma is 1.97 times more volatile than GECI International SA. It trades about 0.18 of its potential returns per unit of risk. GECI International SA is currently generating about -0.05 per unit of risk. If you would invest  6.44  in TME Pharma NV on April 24, 2025 and sell it today you would earn a total of  4.56  from holding TME Pharma NV or generate 70.81% return on investment over 90 days.

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

TME Pharma NV  vs.  GECI International SA

TME Pharma NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TME Pharma NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, TME Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

GECI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days GECI International SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with TME Pharma and GECI International

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

The idea behind TME Pharma NV and GECI International SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.