Correlation Between Circuit Fabology and Gem Year

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

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

Diversification Opportunities for Circuit Fabology and Gem Year

0.17

Correlation Coefficient

Circuit Fabology  Gem Year

Average diversification

The 3 months correlation between Circuit and Gem is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Circuit Fabology Microelectron and Gem Year Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gem Year Industrial and Circuit Fabology 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 Circuit Fabology Microelectronics are associated (or correlated) with Gem Year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gem Year Industrial has no effect on the direction of Circuit Fabology i.e., Circuit Fabology and Gem Year go up and down completely randomly.

Pair Corralation between Circuit Fabology and Gem Year

Assuming the 90 days trading horizon Circuit Fabology Microelectronics is expected to under-perform the Gem Year. But the stock apears to be less risky and, when comparing its historical volatility, Circuit Fabology Microelectronics is 1.1 times less risky than Gem Year. The stock trades about -0.04 of its potential returns per unit of risk. The Gem Year Industrial Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  355.00  in Gem Year Industrial Co on October 24, 2024 and sell it today you would earn a total of  87.00  from holding Gem Year Industrial Co or generate 24.51% return on investment over 90 days.

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

Circuit Fabology Microelectron  vs.  Gem Year Industrial Co

Circuit Fabology Mic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Circuit Fabology Microelectronics 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.

Gem Year Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 10 (%) 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.

Pair Trading with Circuit Fabology and Gem Year

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

The idea behind Circuit Fabology Microelectronics and Gem Year Industrial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.