Correlation Between Nacon Sa and GECI International

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

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

Diversification Opportunities for Nacon Sa and GECI International

-0.33

Correlation Coefficient

Nacon Sa  GECI International

Very good diversification

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

Pair Corralation between Nacon Sa and GECI International

Assuming the 90 days trading horizon Nacon Sa is expected to under-perform the GECI International. But the stock apears to be less risky and, when comparing its historical volatility, Nacon Sa is 2.21 times less risky than GECI International. The stock trades about -0.11 of its potential returns per unit of risk. The GECI International SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  269.00  in GECI International SA on December 30, 2024 and sell it today you would earn a total of  82.00  from holding GECI International SA or generate 30.48% return on investment over 90 days.

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

Nacon Sa  vs.  GECI International SA

Nacon Sa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nacon Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

GECI International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GECI International SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, GECI International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nacon Sa and GECI International

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

The idea behind Nacon Sa and GECI International SA 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.