Correlation Between System and GemVaxKAEL CoLtd

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

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

Diversification Opportunities for System and GemVaxKAEL CoLtd

0.21

Correlation Coefficient

System  GemVaxKAEL CoLtd

Modest diversification

The 3 months correlation between System and GemVaxKAEL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd and System 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 System and Application 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 System i.e., System and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between System and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon System and Application is expected to generate 0.55 times more return on investment than GemVaxKAEL CoLtd. However, System and Application is 1.81 times less risky than GemVaxKAEL CoLtd. It trades about 0.04 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about -0.02 per unit of risk. If you would invest  147,693  in System and Application on October 10, 2024 and sell it today you would earn a total of  8,407  from holding System and Application or generate 5.69% return on investment over 90 days.

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

System and Application  vs.  GemVaxKAEL CoLtd

System and Application

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in System and Application are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, System may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 System and GemVaxKAEL CoLtd

The main advantage of trading using opposite System and GemVaxKAEL CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System 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 System and Application 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.