Correlation Between GemVaxKAEL CoLtd and Industrial Bank

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

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

Diversification Opportunities for GemVaxKAEL CoLtd and Industrial Bank

0.47

Correlation Coefficient

GemVaxKAEL CoLtd  Industrial Bank

Very weak diversification

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

Pair Corralation between GemVaxKAEL CoLtd and Industrial Bank

Assuming the 90 days trading horizon GemVaxKAEL CoLtd is expected to generate 1.04 times less return on investment than Industrial Bank. In addition to that, GemVaxKAEL CoLtd is 2.89 times more volatile than Industrial Bank. It trades about 0.03 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.09 per unit of volatility. If you would invest  936,269  in Industrial Bank on October 26, 2024 and sell it today you would earn a total of  570,731  from holding Industrial Bank or generate 60.96% return on investment over 90 days.

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

GemVaxKAEL CoLtd  vs.  Industrial Bank

GemVaxKAEL CoLtd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GemVaxKAEL CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GemVaxKAEL CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Industrial Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GemVaxKAEL CoLtd and Industrial Bank

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

The idea behind GemVaxKAEL CoLtd and Industrial Bank 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.