Correlation Between PureTech Health and Galileo Resources

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

By analyzing existing cross correlation between PureTech Health plc and Galileo Resources Plc, you can compare the effects of market volatilities on PureTech Health and Galileo Resources 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 PureTech Health with a short position of Galileo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Galileo Resources.

Diversification Opportunities for PureTech Health and Galileo Resources

0.56

Correlation Coefficient

PureTech Health  Galileo Resources

Very weak diversification

The 3 months correlation between PureTech and Galileo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Galileo Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galileo Resources Plc and PureTech Health 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 PureTech Health plc are associated (or correlated) with Galileo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galileo Resources Plc has no effect on the direction of PureTech Health i.e., PureTech Health and Galileo Resources go up and down completely randomly.

Pair Corralation between PureTech Health and Galileo Resources

Assuming the 90 days trading horizon PureTech Health plc is expected to under-perform the Galileo Resources. In addition to that, PureTech Health is 1.42 times more volatile than Galileo Resources Plc. It trades about -0.01 of its total potential returns per unit of risk. Galileo Resources Plc is currently generating about 0.01 per unit of volatility. If you would invest  85.00  in Galileo Resources Plc on April 7, 2025 and sell it today you would earn a total of  0.00  from holding Galileo Resources Plc or generate 0.0% return on investment over 90 days.

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

PureTech Health plc  vs.  Galileo Resources Plc

PureTech Health plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PureTech Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PureTech Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Galileo Resources Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Galileo Resources Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Galileo Resources is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PureTech Health and Galileo Resources

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

The idea behind PureTech Health plc and Galileo Resources Plc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.