Correlation Between General Commercial and Profile Systems

Can any of the company-specific risk be diversified away by investing in both General Commercial and Profile Systems 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 General Commercial and Profile Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Commercial Industrial and Profile Systems Software, you can compare the effects of market volatilities on General Commercial and Profile Systems 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 General Commercial with a short position of Profile Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Commercial and Profile Systems.

Diversification Opportunities for General Commercial and Profile Systems

0.89

Correlation Coefficient

General Commercial  Profile Systems

Very poor diversification

The 3 months correlation between General and Profile is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding General Commercial Industrial and Profile Systems Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profile Systems Software and General Commercial 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 General Commercial Industrial are associated (or correlated) with Profile Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profile Systems Software has no effect on the direction of General Commercial i.e., General Commercial and Profile Systems go up and down completely randomly.

Pair Corralation between General Commercial and Profile Systems

Assuming the 90 days trading horizon General Commercial Industrial is expected to generate 1.51 times more return on investment than Profile Systems. However, General Commercial is 1.51 times more volatile than Profile Systems Software. It trades about 0.2 of its potential returns per unit of risk. Profile Systems Software is currently generating about 0.28 per unit of risk. If you would invest  145.00  in General Commercial Industrial on May 17, 2025 and sell it today you would earn a total of  49.00  from holding General Commercial Industrial or generate 33.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

General Commercial Industrial  vs.  Profile Systems Software

General Commercial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Commercial Industrial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, General Commercial sustained solid returns over the last few months and may actually be approaching a breakup point.

Profile Systems Software

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Profile Systems Software are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Profile Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Commercial and Profile Systems

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

The idea behind General Commercial Industrial and Profile Systems Software 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.