Correlation Between SH Energy and GemVaxKAEL CoLtd

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

By analyzing existing cross correlation between SH Energy Chemical and GemVaxKAEL CoLtd, you can compare the effects of market volatilities on SH Energy and GemVaxKAEL CoLtd 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 SH Energy with a short position of GemVaxKAEL CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and GemVaxKAEL CoLtd.

Diversification Opportunities for SH Energy and GemVaxKAEL CoLtd

0.1

Correlation Coefficient

SH Energy  GemVaxKAEL CoLtd

Average diversification

The 3 months correlation between 002360 and GemVaxKAEL is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd and SH Energy 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 SH Energy Chemical are associated (or correlated) with GemVaxKAEL CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GemVaxKAEL CoLtd has no effect on the direction of SH Energy i.e., SH Energy and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between SH Energy and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon SH Energy Chemical is expected to generate 0.47 times more return on investment than GemVaxKAEL CoLtd. However, SH Energy Chemical is 2.13 times less risky than GemVaxKAEL CoLtd. It trades about 0.0 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about -0.02 per unit of risk. If you would invest  55,000  in SH Energy Chemical on October 10, 2024 and sell it today you would lose (1,800) from holding SH Energy Chemical or give up 3.27% of portfolio value over 90 days.

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

SH Energy Chemical  vs.  GemVaxKAEL CoLtd

SH Energy Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SH Energy Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SH Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GemVaxKAEL CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GemVaxKAEL CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SH Energy and GemVaxKAEL CoLtd

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

The idea behind SH Energy Chemical and GemVaxKAEL CoLtd 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.