Correlation Between GemVaxKAEL CoLtd and TES

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

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

Diversification Opportunities for GemVaxKAEL CoLtd and TES

0.79

Correlation Coefficient

GemVaxKAEL CoLtd  TES

Poor diversification

The 3 months correlation between GemVaxKAEL and TES is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GemVaxKAEL CoLtd and TES Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TES Co 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 TES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TES Co has no effect on the direction of GemVaxKAEL CoLtd i.e., GemVaxKAEL CoLtd and TES go up and down completely randomly.

Pair Corralation between GemVaxKAEL CoLtd and TES

Assuming the 90 days trading horizon GemVaxKAEL CoLtd is expected to generate 1.22 times more return on investment than TES. However, GemVaxKAEL CoLtd is 1.22 times more volatile than TES Co. It trades about 0.4 of its potential returns per unit of risk. TES Co is currently generating about 0.21 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.  TES Co

GemVaxKAEL CoLtd

Risk-Adjusted Performance

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.

TES Co

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TES Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TES sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GemVaxKAEL CoLtd and TES

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

The idea behind GemVaxKAEL CoLtd and TES Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.