Correlation Between Hanjoo Light and GemVaxKAEL CoLtd

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

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

Diversification Opportunities for Hanjoo Light and GemVaxKAEL CoLtd

-0.82

Correlation Coefficient

Hanjoo Light  GemVaxKAEL CoLtd

Pay attention - limited upside

The 3 months correlation between Hanjoo and GemVaxKAEL is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd and Hanjoo Light 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 Hanjoo Light Metal 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 Hanjoo Light i.e., Hanjoo Light and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between Hanjoo Light and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon Hanjoo Light is expected to generate 90.0 times less return on investment than GemVaxKAEL CoLtd. But when comparing it to its historical volatility, Hanjoo Light Metal is 2.65 times less risky than GemVaxKAEL CoLtd. It trades about 0.01 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,413,000  in GemVaxKAEL CoLtd on December 26, 2024 and sell it today you would earn a total of  2,322,000  from holding GemVaxKAEL CoLtd or generate 164.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Hanjoo Light Metal  vs.  GemVaxKAEL CoLtd

Hanjoo Light Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanjoo Light Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hanjoo Light 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

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GemVaxKAEL CoLtd are ranked lower than 28 (%) 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.

Pair Trading with Hanjoo Light and GemVaxKAEL CoLtd

The main advantage of trading using opposite Hanjoo Light and GemVaxKAEL CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light 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 Hanjoo Light Metal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.