Correlation Between Gemtek Technology and Chainqui Construction

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

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

Diversification Opportunities for Gemtek Technology and Chainqui Construction

0.3

Correlation Coefficient

Gemtek Technology  Chainqui Construction

Weak diversification

The 3 months correlation between Gemtek and Chainqui is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gemtek Technology Co and Chainqui Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainqui Construction and Gemtek Technology 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 Gemtek Technology Co are associated (or correlated) with Chainqui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chainqui Construction has no effect on the direction of Gemtek Technology i.e., Gemtek Technology and Chainqui Construction go up and down completely randomly.

Pair Corralation between Gemtek Technology and Chainqui Construction

Assuming the 90 days trading horizon Gemtek Technology Co is expected to under-perform the Chainqui Construction. In addition to that, Gemtek Technology is 1.14 times more volatile than Chainqui Construction Development. It trades about -0.07 of its total potential returns per unit of risk. Chainqui Construction Development is currently generating about -0.04 per unit of volatility. If you would invest  1,665  in Chainqui Construction Development on December 25, 2024 and sell it today you would lose (45.00) from holding Chainqui Construction Development or give up 2.7% of portfolio value over 90 days.

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

Gemtek Technology Co  vs.  Chainqui Construction Developm

Gemtek Technology

Risk-Adjusted Performance

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 fairly stable basic indicators, Gemtek Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chainqui Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chainqui Construction Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chainqui Construction is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Gemtek Technology and Chainqui Construction

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

The idea behind Gemtek Technology Co and Chainqui Construction Development 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.