Correlation Between Industrial and GalaxyCore

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

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

Diversification Opportunities for Industrial and GalaxyCore

0.65

Correlation Coefficient

Industrial  GalaxyCore

Poor diversification

The 3 months correlation between Industrial and GalaxyCore is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and GalaxyCore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GalaxyCore and Industrial 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 Industrial and Commercial are associated (or correlated) with GalaxyCore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GalaxyCore has no effect on the direction of Industrial i.e., Industrial and GalaxyCore go up and down completely randomly.

Pair Corralation between Industrial and GalaxyCore

Assuming the 90 days trading horizon Industrial is expected to generate 3.05 times less return on investment than GalaxyCore. But when comparing it to its historical volatility, Industrial and Commercial is 3.29 times less risky than GalaxyCore. It trades about 0.18 of its potential returns per unit of risk. GalaxyCore is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,063  in GalaxyCore on September 20, 2024 and sell it today you would earn a total of  538.00  from holding GalaxyCore or generate 50.61% return on investment over 90 days.

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

Industrial and Commercial  vs.  GalaxyCore

Industrial and Commercial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

GalaxyCore

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GalaxyCore are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GalaxyCore sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industrial and GalaxyCore

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

The idea behind Industrial and Commercial and GalaxyCore 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.