Correlation Between Gemtek Technology and Sercomm Corp

Can any of the company-specific risk be diversified away by investing in both Gemtek Technology and Sercomm Corp 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 Sercomm Corp 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 Sercomm Corp, you can compare the effects of market volatilities on Gemtek Technology and Sercomm Corp 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 Sercomm Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemtek Technology and Sercomm Corp.

Diversification Opportunities for Gemtek Technology and Sercomm Corp

0.22

Correlation Coefficient

Gemtek Technology  Sercomm Corp

Modest diversification

The 3 months correlation between Gemtek and Sercomm is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gemtek Technology Co and Sercomm Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sercomm Corp 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 Sercomm Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sercomm Corp has no effect on the direction of Gemtek Technology i.e., Gemtek Technology and Sercomm Corp go up and down completely randomly.

Pair Corralation between Gemtek Technology and Sercomm Corp

Assuming the 90 days trading horizon Gemtek Technology Co is expected to under-perform the Sercomm Corp. But the stock apears to be less risky and, when comparing its historical volatility, Gemtek Technology Co is 1.79 times less risky than Sercomm Corp. The stock trades about -0.12 of its potential returns per unit of risk. The Sercomm Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12,150  in Sercomm Corp on December 30, 2024 and sell it today you would earn a total of  150.00  from holding Sercomm Corp or generate 1.23% return on investment over 90 days.

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

Gemtek Technology Co  vs.  Sercomm Corp

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 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.

Sercomm Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sercomm Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sercomm Corp 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 Sercomm Corp

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

The idea behind Gemtek Technology Co and Sercomm Corp 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.