Correlation Between GemVaxKAEL CoLtd and Design

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

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

Diversification Opportunities for GemVaxKAEL CoLtd and Design

0.48

Correlation Coefficient

GemVaxKAEL CoLtd  Design

Very weak diversification

The 3 months correlation between GemVaxKAEL and Design is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GemVaxKAEL CoLtd and Design Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design and GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd are associated (or correlated) with Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design has no effect on the direction of GemVaxKAEL CoLtd i.e., GemVaxKAEL CoLtd and Design go up and down completely randomly.

Pair Corralation between GemVaxKAEL CoLtd and Design

Assuming the 90 days trading horizon GemVaxKAEL CoLtd is expected to generate 14.26 times less return on investment than Design. But when comparing it to its historical volatility, GemVaxKAEL CoLtd is 1.45 times less risky than Design. It trades about 0.0 of its potential returns per unit of risk. Design Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  75,100  in Design Co on September 23, 2024 and sell it today you would lose (5,300) from holding Design Co or give up 7.06% of portfolio value over 90 days.

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

GemVaxKAEL CoLtd  vs.  Design Co

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.

Design

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Design Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Design sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GemVaxKAEL CoLtd and Design

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

The idea behind GemVaxKAEL CoLtd and Design Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.