Correlation Between Gemz Corp and A1
Can any of the company-specific risk be diversified away by investing in both Gemz Corp and A1 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 A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gemz Corp and A1 Group, you can compare the effects of market volatilities on Gemz Corp and A1 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 A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemz Corp and A1.
Diversification Opportunities for Gemz Corp and A1
Good diversification
The 3 months correlation between Gemz and A1 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Gemz Corp and A1 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1 Group 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 A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1 Group has no effect on the direction of Gemz Corp i.e., Gemz Corp and A1 go up and down completely randomly.
Pair Corralation between Gemz Corp and A1
Given the investment horizon of 90 days Gemz Corp is expected to generate 1.36 times more return on investment than A1. However, Gemz Corp is 1.36 times more volatile than A1 Group. It trades about 0.08 of its potential returns per unit of risk. A1 Group is currently generating about 0.02 per unit of risk. If you would invest 0.09 in Gemz Corp on August 27, 2024 and sell it today you would lose (0.04) from holding Gemz Corp or give up 44.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gemz Corp vs. A1 Group
Performance |
| Timeline |
| Gemz Corp |
| A1 Group |
Gemz Corp and A1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gemz Corp and A1
The main advantage of trading using opposite Gemz Corp and A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gemz Corp position performs unexpectedly, A1 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 A1 will offset losses from the drop in A1's long position.| Gemz Corp vs. A1 Group | Gemz Corp vs. Xtra Energy Corp | Gemz Corp vs. Biopower Operations Corp | Gemz Corp vs. New Generation Consumer |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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