Correlation Between GERATHERM MEDICAL and Rio Tinto

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

By analyzing existing cross correlation between GERATHERM MEDICAL and Rio Tinto Group, you can compare the effects of market volatilities on GERATHERM MEDICAL and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of GERATHERM MEDICAL and Rio Tinto.

Diversification Opportunities for GERATHERM MEDICAL and Rio Tinto

-0.29

Correlation Coefficient

GERATHERM MEDICAL  Rio Tinto

Very good diversification

The 3 months correlation between GERATHERM and Rio is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GERATHERM MEDICAL and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto Group 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of GERATHERM MEDICAL i.e., GERATHERM MEDICAL and Rio Tinto go up and down completely randomly.

Pair Corralation between GERATHERM MEDICAL and Rio Tinto

Assuming the 90 days trading horizon GERATHERM MEDICAL is expected to generate 1.28 times more return on investment than Rio Tinto. However, GERATHERM MEDICAL is 1.28 times more volatile than Rio Tinto Group. It trades about 0.13 of its potential returns per unit of risk. Rio Tinto Group is currently generating about 0.0 per unit of risk. If you would invest  275.00  in GERATHERM MEDICAL on April 23, 2025 and sell it today you would earn a total of  56.00  from holding GERATHERM MEDICAL or generate 20.36% return on investment over 90 days.

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

GERATHERM MEDICAL  vs.  Rio Tinto Group

GERATHERM MEDICAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GERATHERM MEDICAL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GERATHERM MEDICAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Rio Tinto Group

Risk-Adjusted Performance

Weak

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

Pair Trading with GERATHERM MEDICAL and Rio Tinto

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

The idea behind GERATHERM MEDICAL and Rio Tinto Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.