Correlation Between Walmart and Gemfields Group

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

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

Diversification Opportunities for Walmart and Gemfields Group

-0.47

Correlation Coefficient

Walmart  Gemfields Group

Very good diversification

The 3 months correlation between Walmart and Gemfields is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Gemfields Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group and Walmart 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 Walmart are associated (or correlated) with Gemfields Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Walmart i.e., Walmart and Gemfields Group go up and down completely randomly.

Pair Corralation between Walmart and Gemfields Group

Assuming the 90 days trading horizon Walmart is expected to under-perform the Gemfields Group. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 10.45 times less risky than Gemfields Group. The stock trades about -0.03 of its potential returns per unit of risk. The Gemfields Group Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4.90  in Gemfields Group Limited on April 24, 2025 and sell it today you would earn a total of  1.10  from holding Gemfields Group Limited or generate 22.45% return on investment over 90 days.

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

Walmart  vs.  Gemfields Group Limited

Walmart

Risk-Adjusted Performance

Very Weak

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

Gemfields Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gemfields Group Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gemfields Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Gemfields Group

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

The idea behind Walmart and Gemfields Group Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.