Correlation Between Namyang Dairy and GemVaxKAEL CoLtd

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

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

Diversification Opportunities for Namyang Dairy and GemVaxKAEL CoLtd

-0.39

Correlation Coefficient

Namyang Dairy  GemVaxKAEL CoLtd

Very good diversification

The 3 months correlation between Namyang and GemVaxKAEL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Namyang Dairy and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd and Namyang Dairy 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 Namyang Dairy are associated (or correlated) with GemVaxKAEL CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GemVaxKAEL CoLtd has no effect on the direction of Namyang Dairy i.e., Namyang Dairy and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between Namyang Dairy and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon Namyang Dairy is expected to generate 16.55 times more return on investment than GemVaxKAEL CoLtd. However, Namyang Dairy is 16.55 times more volatile than GemVaxKAEL CoLtd. It trades about 0.11 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about 0.0 per unit of risk. If you would invest  5,660,000  in Namyang Dairy on September 23, 2024 and sell it today you would earn a total of  260,000  from holding Namyang Dairy or generate 4.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Namyang Dairy  vs.  GemVaxKAEL CoLtd

Namyang Dairy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Namyang Dairy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Namyang Dairy sustained solid returns over the last few months and may actually be approaching a breakup point.

GemVaxKAEL CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GemVaxKAEL CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GemVaxKAEL CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Namyang Dairy and GemVaxKAEL CoLtd

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

The idea behind Namyang Dairy and GemVaxKAEL CoLtd 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.