Correlation Between Gemz Corp and Puget Technologies

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

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

Diversification Opportunities for Gemz Corp and Puget Technologies

0.12

Correlation Coefficient

Gemz Corp  Puget Technologies

Average diversification

The 3 months correlation between Gemz and Puget is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gemz Corp and Puget Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puget Technologies and Gemz Corp 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 Gemz Corp are associated (or correlated) with Puget Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puget Technologies has no effect on the direction of Gemz Corp i.e., Gemz Corp and Puget Technologies go up and down completely randomly.

Pair Corralation between Gemz Corp and Puget Technologies

If you would invest  0.03  in Gemz Corp on September 18, 2024 and sell it today you would earn a total of  0.01  from holding Gemz Corp or generate 33.33% return on investment over 90 days.

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

Gemz Corp  vs.  Puget Technologies

Gemz Corp

Risk-Adjusted Performance

7 of 100

OK

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

Puget Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Puget Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Puget Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gemz Corp and Puget Technologies

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

The idea behind Gemz Corp and Puget Technologies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.