Correlation Between Gem Year and Lens Technology

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

Diversification Opportunities for Gem Year and Lens Technology

0.38

Correlation Coefficient

Gem Year  Lens Technology

Weak diversification

The 3 months correlation between Gem and Lens is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and Lens Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lens 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 Lens Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lens Technology has no effect on the direction of Gem Year i.e., Gem Year and Lens Technology go up and down completely randomly.

Pair Corralation between Gem Year and Lens Technology

Assuming the 90 days trading horizon Gem Year is expected to generate 12.13 times less return on investment than Lens Technology. But when comparing it to its historical volatility, Gem Year Industrial Co is 1.23 times less risky than Lens Technology. It trades about 0.01 of its potential returns per unit of risk. Lens Technology Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,016  in Lens Technology Co on October 4, 2024 and sell it today you would earn a total of  1,174  from holding Lens Technology Co or generate 115.55% 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.  Lens Technology Co

Gem Year Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 6 (%) 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.

Lens Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lens Technology Co 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 Gem Year and Lens Technology

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

The idea behind Gem Year Industrial Co and Lens Technology Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.