Correlation Between Incar Financial and GemVaxKAEL CoLtd

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

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

Diversification Opportunities for Incar Financial and GemVaxKAEL CoLtd

0.05

Correlation Coefficient

Incar Financial  GemVaxKAEL CoLtd

Significant diversification

The 3 months correlation between Incar and GemVaxKAEL is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Incar Financial Service and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd and Incar Financial 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 Incar Financial Service 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 Incar Financial i.e., Incar Financial and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between Incar Financial and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon Incar Financial is expected to generate 1.96 times less return on investment than GemVaxKAEL CoLtd. But when comparing it to its historical volatility, Incar Financial Service is 1.65 times less risky than GemVaxKAEL CoLtd. It trades about 0.1 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,329,000  in GemVaxKAEL CoLtd on October 25, 2024 and sell it today you would earn a total of  477,000  from holding GemVaxKAEL CoLtd or generate 35.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Incar Financial Service  vs.  GemVaxKAEL CoLtd

Incar Financial Service

Risk-Adjusted Performance

7 of 100

OK

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

GemVaxKAEL CoLtd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GemVaxKAEL CoLtd are ranked lower than 9 (%) 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 Incar Financial and GemVaxKAEL CoLtd

The main advantage of trading using opposite Incar Financial and GemVaxKAEL CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incar Financial 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 Incar Financial Service 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.