Correlation Between Gemtek Technology and U Media
Can any of the company-specific risk be diversified away by investing in both Gemtek Technology and U Media 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 Gemtek Technology and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gemtek Technology Co and U Media Communications, you can compare the effects of market volatilities on Gemtek Technology and U Media 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 Gemtek Technology with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemtek Technology and U Media.
Diversification Opportunities for Gemtek Technology and U Media
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gemtek and 6470 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gemtek Technology Co and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications and Gemtek Technology 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 Gemtek Technology Co are associated (or correlated) with U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Gemtek Technology i.e., Gemtek Technology and U Media go up and down completely randomly.
Pair Corralation between Gemtek Technology and U Media
Assuming the 90 days trading horizon Gemtek Technology Co is expected to under-perform the U Media. But the stock apears to be less risky and, when comparing its historical volatility, Gemtek Technology Co is 1.37 times less risky than U Media. The stock trades about -0.01 of its potential returns per unit of risk. The U Media Communications is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,110 in U Media Communications on August 29, 2024 and sell it today you would earn a total of 100.00 from holding U Media Communications or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gemtek Technology Co vs. U Media Communications
Performance |
| Timeline |
| Gemtek Technology |
| U Media Communications |
Gemtek Technology and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gemtek Technology and U Media
The main advantage of trading using opposite Gemtek Technology and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gemtek Technology position performs unexpectedly, U Media 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 U Media will offset losses from the drop in U Media's long position.| Gemtek Technology vs. D Link Corp | Gemtek Technology vs. Sunplus Technology Co | Gemtek Technology vs. Silitech Technology Corp | Gemtek Technology vs. Zinwell |
| U Media vs. Mechema Chemicals Int | U Media vs. Grand Pacific Petrochemical | U Media vs. Taita Chemical Co | U Media vs. Phoenix Silicon International |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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