Correlation Between GemVaxKAEL CoLtd and HANA Micron

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

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

Diversification Opportunities for GemVaxKAEL CoLtd and HANA Micron

0.6

Correlation Coefficient

GemVaxKAEL CoLtd  HANA Micron

Poor diversification

The 3 months correlation between GemVaxKAEL and HANA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GemVaxKAEL CoLtd and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of GemVaxKAEL CoLtd i.e., GemVaxKAEL CoLtd and HANA Micron go up and down completely randomly.

Pair Corralation between GemVaxKAEL CoLtd and HANA Micron

Assuming the 90 days trading horizon GemVaxKAEL CoLtd is expected to generate 1.08 times more return on investment than HANA Micron. However, GemVaxKAEL CoLtd is 1.08 times more volatile than HANA Micron. It trades about 0.4 of its potential returns per unit of risk. HANA Micron is currently generating about 0.17 per unit of risk. If you would invest  1,413,000  in GemVaxKAEL CoLtd on December 25, 2024 and sell it today you would earn a total of  2,557,000  from holding GemVaxKAEL CoLtd or generate 180.96% return on investment over 90 days.

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

GemVaxKAEL CoLtd  vs.  HANA Micron

GemVaxKAEL CoLtd

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GemVaxKAEL CoLtd are ranked lower than 31 (%) 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.

HANA Micron

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANA Micron are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HANA Micron sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GemVaxKAEL CoLtd and HANA Micron

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

The idea behind GemVaxKAEL CoLtd and HANA Micron 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.