Correlation Between Gemz Corp and Southern ITS

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

By analyzing existing cross correlation between Gemz Corp and Southern ITS International, you can compare the effects of market volatilities on Gemz Corp and Southern ITS 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 Southern ITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemz Corp and Southern ITS.

Diversification Opportunities for Gemz Corp and Southern ITS

-0.23

Correlation Coefficient

Gemz Corp  Southern ITS

Very good diversification

The 3 months correlation between Gemz and Southern is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gemz Corp and Southern ITS International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern ITS Interna 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 Southern ITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern ITS Interna has no effect on the direction of Gemz Corp i.e., Gemz Corp and Southern ITS go up and down completely randomly.

Pair Corralation between Gemz Corp and Southern ITS

Given the investment horizon of 90 days Gemz Corp is expected to generate 2.11 times more return on investment than Southern ITS. However, Gemz Corp is 2.11 times more volatile than Southern ITS International. It trades about 0.06 of its potential returns per unit of risk. Southern ITS International is currently generating about 0.05 per unit of risk. If you would invest  0.25  in Gemz Corp on October 11, 2024 and sell it today you would lose (0.23) from holding Gemz Corp or give up 92.0% of portfolio value over 90 days.

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

Gemz Corp  vs.  Southern ITS International

Gemz Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gemz Corp are ranked lower than 6 (%) 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.

Southern ITS Interna

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern ITS International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Southern ITS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gemz Corp and Southern ITS

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

The idea behind Gemz Corp and Southern ITS International 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.