Correlation Between Gemz Corp and Kasten

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

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

Diversification Opportunities for Gemz Corp and Kasten

-0.05

Correlation Coefficient

Gemz Corp  Kasten

Good diversification

The 3 months correlation between Gemz and Kasten is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gemz Corp and Kasten Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kasten Inc and Gemz Corp 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 Gemz Corp are associated (or correlated) with Kasten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kasten Inc has no effect on the direction of Gemz Corp i.e., Gemz Corp and Kasten go up and down completely randomly.

Pair Corralation between Gemz Corp and Kasten

Given the investment horizon of 90 days Gemz Corp is expected to under-perform the Kasten. But the pink sheet apears to be less risky and, when comparing its historical volatility, Gemz Corp is 1.04 times less risky than Kasten. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Kasten Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  0.32  in Kasten Inc on December 5, 2024 and sell it today you would earn a total of  0.68  from holding Kasten Inc or generate 212.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Gemz Corp  vs.  Kasten Inc

Gemz Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gemz Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gemz Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Kasten Inc

Risk-Adjusted Performance

Good

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

Pair Trading with Gemz Corp and Kasten

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

The idea behind Gemz Corp and Kasten Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.