Correlation Between Klinique Med and Gunkul Engineering

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

By analyzing existing cross correlation between The Klinique Med and Gunkul Engineering Public, you can compare the effects of market volatilities on Klinique Med and Gunkul Engineering 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 Klinique Med with a short position of Gunkul Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klinique Med and Gunkul Engineering.

Diversification Opportunities for Klinique Med and Gunkul Engineering

0.7

Correlation Coefficient

Klinique Med  Gunkul Engineering

Poor diversification

The 3 months correlation between Klinique and Gunkul is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Klinique Med and Gunkul Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunkul Engineering Public and Klinique Med 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 The Klinique Med are associated (or correlated) with Gunkul Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunkul Engineering Public has no effect on the direction of Klinique Med i.e., Klinique Med and Gunkul Engineering go up and down completely randomly.

Pair Corralation between Klinique Med and Gunkul Engineering

Assuming the 90 days trading horizon The Klinique Med is expected to generate 0.98 times more return on investment than Gunkul Engineering. However, The Klinique Med is 1.02 times less risky than Gunkul Engineering. It trades about -0.12 of its potential returns per unit of risk. Gunkul Engineering Public is currently generating about -0.19 per unit of risk. If you would invest  3,650  in The Klinique Med on September 14, 2024 and sell it today you would lose (525.00) from holding The Klinique Med or give up 14.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

The Klinique Med  vs.  Gunkul Engineering Public

Klinique Med

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Klinique Med has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gunkul Engineering Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunkul Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Klinique Med and Gunkul Engineering

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

The idea behind The Klinique Med and Gunkul Engineering Public 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.