Correlation Between GOME Retail and Kemper

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

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

Diversification Opportunities for GOME Retail and Kemper

-0.46

Correlation Coefficient

GOME Retail  Kemper

Very good diversification

The 3 months correlation between GOME and Kemper is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding GOME Retail Holdings and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and GOME Retail 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 GOME Retail Holdings are associated (or correlated) with Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of GOME Retail i.e., GOME Retail and Kemper go up and down completely randomly.

Pair Corralation between GOME Retail and Kemper

Assuming the 90 days trading horizon GOME Retail Holdings is expected to generate 6.35 times more return on investment than Kemper. However, GOME Retail is 6.35 times more volatile than Kemper. It trades about 0.02 of its potential returns per unit of risk. Kemper is currently generating about 0.09 per unit of risk. If you would invest  0.30  in GOME Retail Holdings on October 2, 2024 and sell it today you would lose (0.20) from holding GOME Retail Holdings or give up 66.67% of portfolio value over 90 days.

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

GOME Retail Holdings  vs.  Kemper

GOME Retail Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GOME Retail Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Kemper

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Kemper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOME Retail and Kemper

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

The idea behind GOME Retail Holdings and Kemper 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.