Correlation Between GERATHERM MEDICAL and Fastenal

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

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

Diversification Opportunities for GERATHERM MEDICAL and Fastenal

0.43

Correlation Coefficient

GERATHERM MEDICAL  Fastenal

Very weak diversification

The 3 months correlation between GERATHERM and Fastenal is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding GERATHERM MEDICAL and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and GERATHERM MEDICAL 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 GERATHERM MEDICAL are associated (or correlated) with Fastenal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastenal has no effect on the direction of GERATHERM MEDICAL i.e., GERATHERM MEDICAL and Fastenal go up and down completely randomly.

Pair Corralation between GERATHERM MEDICAL and Fastenal

Assuming the 90 days trading horizon GERATHERM MEDICAL is expected to generate 1.86 times more return on investment than Fastenal. However, GERATHERM MEDICAL is 1.86 times more volatile than Fastenal Company. It trades about 0.13 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.15 per unit of risk. If you would invest  269.00  in GERATHERM MEDICAL on April 21, 2025 and sell it today you would earn a total of  59.00  from holding GERATHERM MEDICAL or generate 21.93% return on investment over 90 days.

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

GERATHERM MEDICAL  vs.  Fastenal Company

GERATHERM MEDICAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GERATHERM MEDICAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GERATHERM MEDICAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fastenal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fastenal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GERATHERM MEDICAL and Fastenal

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

The idea behind GERATHERM MEDICAL and Fastenal Company 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.