Correlation Between CM Hospitalar and G2D Investments

Can any of the company-specific risk be diversified away by investing in both CM Hospitalar and G2D Investments 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 CM Hospitalar and G2D Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CM Hospitalar SA and G2D Investments, you can compare the effects of market volatilities on CM Hospitalar and G2D Investments 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 CM Hospitalar with a short position of G2D Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM Hospitalar and G2D Investments.

Diversification Opportunities for CM Hospitalar and G2D Investments

0.06

Correlation Coefficient

CM Hospitalar  G2D Investments

Significant diversification

The 3 months correlation between VVEO3 and G2D is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA and G2D Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2D Investments and CM Hospitalar 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 CM Hospitalar SA are associated (or correlated) with G2D Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2D Investments has no effect on the direction of CM Hospitalar i.e., CM Hospitalar and G2D Investments go up and down completely randomly.

Pair Corralation between CM Hospitalar and G2D Investments

Assuming the 90 days trading horizon CM Hospitalar SA is expected to under-perform the G2D Investments. In addition to that, CM Hospitalar is 1.54 times more volatile than G2D Investments. It trades about -0.02 of its total potential returns per unit of risk. G2D Investments is currently generating about 0.04 per unit of volatility. If you would invest  155.00  in G2D Investments on April 20, 2025 and sell it today you would earn a total of  7.00  from holding G2D Investments or generate 4.52% return on investment over 90 days.

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

CM Hospitalar SA  vs.  G2D Investments

CM Hospitalar SA

Risk-Adjusted Performance

Very Weak

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

G2D Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in G2D Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, G2D Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CM Hospitalar and G2D Investments

The main advantage of trading using opposite CM Hospitalar and G2D Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CM Hospitalar position performs unexpectedly, G2D Investments 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 G2D Investments will offset losses from the drop in G2D Investments' long position.

The idea behind CM Hospitalar SA and G2D Investments 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.