Correlation Between GSC and KMD

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

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

Diversification Opportunities for GSC and KMD

0.14

Correlation Coefficient

GSC  KMD

Average diversification

The 3 months correlation between GSC and KMD is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding GSC and KMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMD and GSC 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 GSC are associated (or correlated) with KMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMD has no effect on the direction of GSC i.e., GSC and KMD go up and down completely randomly.

Pair Corralation between GSC and KMD

If you would invest  0.15  in GSC on September 1, 2024 and sell it today you would earn a total of  0.00  from holding GSC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.76%
Values	Daily Returns

GSC  vs.  KMD

GSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, GSC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

KMD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KMD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, KMD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GSC and KMD

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

The idea behind GSC and KMD 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.