Correlation Between Ichia Technologies and Gemtek Technology

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

By analyzing existing cross correlation between Ichia Technologies and Gemtek Technology Co, you can compare the effects of market volatilities on Ichia Technologies and Gemtek Technology 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 Ichia Technologies with a short position of Gemtek Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ichia Technologies and Gemtek Technology.

Diversification Opportunities for Ichia Technologies and Gemtek Technology

0.75

Correlation Coefficient

Ichia Technologies  Gemtek Technology

Poor diversification

The 3 months correlation between Ichia and Gemtek is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ichia Technologies and Gemtek Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemtek Technology and Ichia Technologies 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 Ichia Technologies are associated (or correlated) with Gemtek Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemtek Technology has no effect on the direction of Ichia Technologies i.e., Ichia Technologies and Gemtek Technology go up and down completely randomly.

Pair Corralation between Ichia Technologies and Gemtek Technology

Assuming the 90 days trading horizon Ichia Technologies is expected to generate 0.96 times more return on investment than Gemtek Technology. However, Ichia Technologies is 1.04 times less risky than Gemtek Technology. It trades about -0.06 of its potential returns per unit of risk. Gemtek Technology Co is currently generating about -0.11 per unit of risk. If you would invest  4,205  in Ichia Technologies on September 27, 2024 and sell it today you would lose (315.00) from holding Ichia Technologies or give up 7.49% of portfolio value over 90 days.

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

Ichia Technologies  vs.  Gemtek Technology Co

Ichia Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ichia Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Gemtek Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemtek Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ichia Technologies and Gemtek Technology

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

The idea behind Ichia Technologies and Gemtek Technology 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.