Correlation Between Gemtek Technology and Chien Kuo

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

Diversification Opportunities for Gemtek Technology and Chien Kuo

-0.3

Correlation Coefficient

Gemtek Technology  Chien Kuo

Very good diversification

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

Pair Corralation between Gemtek Technology and Chien Kuo

Assuming the 90 days trading horizon Gemtek Technology Co is expected to under-perform the Chien Kuo. But the stock apears to be less risky and, when comparing its historical volatility, Gemtek Technology Co is 1.18 times less risky than Chien Kuo. The stock trades about -0.06 of its potential returns per unit of risk. The Chien Kuo Construction is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,700  in Chien Kuo Construction on December 23, 2024 and sell it today you would earn a total of  460.00  from holding Chien Kuo Construction or generate 17.04% return on investment over 90 days.

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

Gemtek Technology Co  vs.  Chien Kuo Construction

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.

Chien Kuo Construction

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chien Kuo Construction are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chien Kuo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gemtek Technology and Chien Kuo

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

The idea behind Gemtek Technology Co and Chien Kuo Construction 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.