Correlation Between Inocycle Technology and Galva Technologies

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

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

Diversification Opportunities for Inocycle Technology and Galva Technologies

0.33

Correlation Coefficient

Inocycle Technology  Galva Technologies

Weak diversification

The 3 months correlation between Inocycle and Galva is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Inocycle Technology Tbk and Galva Technologies Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galva Technologies Tbk and Inocycle Technology 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 Inocycle Technology Tbk are associated (or correlated) with Galva Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galva Technologies Tbk has no effect on the direction of Inocycle Technology i.e., Inocycle Technology and Galva Technologies go up and down completely randomly.

Pair Corralation between Inocycle Technology and Galva Technologies

Assuming the 90 days trading horizon Inocycle Technology Tbk is expected to under-perform the Galva Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Inocycle Technology Tbk is 1.25 times less risky than Galva Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The Galva Technologies Tbk is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  33,600  in Galva Technologies Tbk on December 31, 2024 and sell it today you would lose (1,800) from holding Galva Technologies Tbk or give up 5.36% of portfolio value over 90 days.

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

Inocycle Technology Tbk  vs.  Galva Technologies Tbk

Inocycle Technology Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inocycle Technology Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Galva Technologies Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galva Technologies Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Galva Technologies is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Inocycle Technology and Galva Technologies

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

The idea behind Inocycle Technology Tbk and Galva Technologies Tbk 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.