Correlation Between New Generation and Gemz Corp
Can any of the company-specific risk be diversified away by investing in both New Generation and Gemz Corp 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 New Generation and Gemz Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Generation Consumer and Gemz Corp, you can compare the effects of market volatilities on New Generation and Gemz Corp 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 New Generation with a short position of Gemz Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Generation and Gemz Corp.
Diversification Opportunities for New Generation and Gemz Corp
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and Gemz is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding New Generation Consumer and Gemz Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemz Corp and New Generation 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 New Generation Consumer are associated (or correlated) with Gemz Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemz Corp has no effect on the direction of New Generation i.e., New Generation and Gemz Corp go up and down completely randomly.
Pair Corralation between New Generation and Gemz Corp
Given the investment horizon of 90 days New Generation is expected to generate 2.18 times less return on investment than Gemz Corp. But when comparing it to its historical volatility, New Generation Consumer is 1.41 times less risky than Gemz Corp. It trades about 0.05 of its potential returns per unit of risk. Gemz Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Gemz Corp on November 2, 2024 and sell it today you would lose (0.01) from holding Gemz Corp or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
New Generation Consumer vs. Gemz Corp
Performance |
| Timeline |
| New Generation Consumer |
| Gemz Corp |
New Generation and Gemz Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Generation and Gemz Corp
The main advantage of trading using opposite New Generation and Gemz Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Generation position performs unexpectedly, Gemz Corp 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 Gemz Corp will offset losses from the drop in Gemz Corp's long position.| New Generation vs. Xtra Energy Corp | New Generation vs. Arsenal Digital Holdings | New Generation vs. UHF Logistics Group | New Generation vs. XCana Petroleum |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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