Correlation Between Gem Year and NAURA Technology

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

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

Diversification Opportunities for Gem Year and NAURA Technology

0.35

Correlation Coefficient

Gem Year  NAURA Technology

Weak diversification

The 3 months correlation between Gem and NAURA is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and NAURA Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAURA Technology and Gem Year 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 Gem Year Industrial Co are associated (or correlated) with NAURA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAURA Technology has no effect on the direction of Gem Year i.e., Gem Year and NAURA Technology go up and down completely randomly.

Pair Corralation between Gem Year and NAURA Technology

Assuming the 90 days trading horizon Gem Year is expected to generate 10.94 times less return on investment than NAURA Technology. But when comparing it to its historical volatility, Gem Year Industrial Co is 1.15 times less risky than NAURA Technology. It trades about 0.0 of its potential returns per unit of risk. NAURA Technology Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25,180  in NAURA Technology Group on October 25, 2024 and sell it today you would earn a total of  13,391  from holding NAURA Technology Group or generate 53.18% return on investment over 90 days.

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

Gem Year Industrial Co  vs.  NAURA Technology Group

Gem Year Industrial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem Year sustained solid returns over the last few months and may actually be approaching a breakup point.

NAURA Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAURA Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NAURA Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gem Year and NAURA Technology

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

The idea behind Gem Year Industrial Co and NAURA Technology Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.