Correlation Between Komori and GE Aerospace

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

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

Diversification Opportunities for Komori and GE Aerospace

0.0

Correlation Coefficient

Komori  GE Aerospace

Pay attention - limited upside

The 3 months correlation between Komori and GE Aerospace is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Komori and GE Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Aerospace and Komori 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 Komori are associated (or correlated) with GE Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Aerospace has no effect on the direction of Komori i.e., Komori and GE Aerospace go up and down completely randomly.

Pair Corralation between Komori and GE Aerospace

If you would invest  16,976  in GE Aerospace on December 27, 2024 and sell it today you would earn a total of  3,612  from holding GE Aerospace or generate 21.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Komori  vs.  GE Aerospace

Komori

Risk-Adjusted Performance

Very Weak

Over the last 90 days Komori has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Komori is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GE Aerospace

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, GE Aerospace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Komori and GE Aerospace

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

The idea behind Komori and GE Aerospace 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.