Correlation Between Gem Terminal and BES Engineering
Can any of the company-specific risk be diversified away by investing in both Gem Terminal and BES 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 Gem Terminal and BES Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gem Terminal Industry and BES Engineering Co, you can compare the effects of market volatilities on Gem Terminal and BES 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 Gem Terminal with a short position of BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Terminal and BES Engineering.
Diversification Opportunities for Gem Terminal and BES Engineering
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gem and BES is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gem Terminal Industry and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering and Gem Terminal 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 Gem Terminal Industry are associated (or correlated) with BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of Gem Terminal i.e., Gem Terminal and BES Engineering go up and down completely randomly.
Pair Corralation between Gem Terminal and BES Engineering
Assuming the 90 days trading horizon Gem Terminal Industry is expected to under-perform the BES Engineering. In addition to that, Gem Terminal is 1.26 times more volatile than BES Engineering Co. It trades about 0.0 of its total potential returns per unit of risk. BES Engineering Co is currently generating about 0.01 per unit of volatility. If you would invest 1,120 in BES Engineering Co on September 4, 2024 and sell it today you would lose (10.00) from holding BES Engineering Co or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Gem Terminal Industry vs. BES Engineering Co
Performance |
| Timeline |
| Gem Terminal Industry |
| BES Engineering |
Gem Terminal and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gem Terminal and BES Engineering
The main advantage of trading using opposite Gem Terminal and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem Terminal position performs unexpectedly, BES 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| Gem Terminal vs. Universal Microelectronics Co | Gem Terminal vs. AVerMedia Technologies | Gem Terminal vs. Symtek Automation Asia | Gem Terminal vs. WiseChip Semiconductor |
| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Kee Tai Properties |
Check out your portfolio center.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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