Correlation Between Galaxy Software and CKM Building

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

By analyzing existing cross correlation between Galaxy Software Services and CKM Building Material, you can compare the effects of market volatilities on Galaxy Software and CKM Building 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 Galaxy Software with a short position of CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Software and CKM Building.

Diversification Opportunities for Galaxy Software and CKM Building

0.1

Correlation Coefficient

Galaxy Software  CKM Building

Average diversification

The 3 months correlation between Galaxy and CKM is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Software Services and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material and Galaxy Software 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 Galaxy Software Services are associated (or correlated) with CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Galaxy Software i.e., Galaxy Software and CKM Building go up and down completely randomly.

Pair Corralation between Galaxy Software and CKM Building

Assuming the 90 days trading horizon Galaxy Software Services is expected to generate 20.37 times more return on investment than CKM Building. However, Galaxy Software is 20.37 times more volatile than CKM Building Material. It trades about 0.05 of its potential returns per unit of risk. CKM Building Material is currently generating about 0.09 per unit of risk. If you would invest  5,983  in Galaxy Software Services on October 11, 2024 and sell it today you would earn a total of  6,867  from holding Galaxy Software Services or generate 114.78% return on investment over 90 days.

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

Galaxy Software Services  vs.  CKM Building Material

Galaxy Software Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Software Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Galaxy Software showed solid returns over the last few months and may actually be approaching a breakup point.

CKM Building Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CKM Building Material has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CKM Building is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Galaxy Software and CKM Building

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

The idea behind Galaxy Software Services and CKM Building Material 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.