Correlation Between Gemdale Corp and Piotech

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

By analyzing existing cross correlation between Gemdale Corp and Piotech Inc A, you can compare the effects of market volatilities on Gemdale Corp and Piotech 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 Gemdale Corp with a short position of Piotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemdale Corp and Piotech.

Diversification Opportunities for Gemdale Corp and Piotech

0.36

Correlation Coefficient

Gemdale Corp  Piotech

Weak diversification

The 3 months correlation between Gemdale and Piotech is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gemdale Corp and Piotech Inc A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piotech Inc A and Gemdale Corp 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 Gemdale Corp are associated (or correlated) with Piotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piotech Inc A has no effect on the direction of Gemdale Corp i.e., Gemdale Corp and Piotech go up and down completely randomly.

Pair Corralation between Gemdale Corp and Piotech

Assuming the 90 days trading horizon Gemdale Corp is expected to under-perform the Piotech. But the stock apears to be less risky and, when comparing its historical volatility, Gemdale Corp is 1.14 times less risky than Piotech. The stock trades about -0.1 of its potential returns per unit of risk. The Piotech Inc A is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  17,280  in Piotech Inc A on October 8, 2024 and sell it today you would lose (2,480) from holding Piotech Inc A or give up 14.35% of portfolio value over 90 days.

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

Gemdale Corp  vs.  Piotech Inc A

Gemdale Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemdale Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Piotech Inc A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piotech Inc A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Gemdale Corp and Piotech

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

The idea behind Gemdale Corp and Piotech Inc A 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.