Correlation Between Daou Technology and GenoFocus
Can any of the company-specific risk be diversified away by investing in both Daou Technology and GenoFocus 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 Daou Technology and GenoFocus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Technology and GenoFocus, you can compare the effects of market volatilities on Daou Technology and GenoFocus 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 Daou Technology with a short position of GenoFocus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Technology and GenoFocus.
Diversification Opportunities for Daou Technology and GenoFocus
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daou and GenoFocus is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology and GenoFocus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GenoFocus and Daou 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 Daou Technology are associated (or correlated) with GenoFocus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GenoFocus has no effect on the direction of Daou Technology i.e., Daou Technology and GenoFocus go up and down completely randomly.
Pair Corralation between Daou Technology and GenoFocus
Assuming the 90 days trading horizon Daou Technology is expected to under-perform the GenoFocus. But the stock apears to be less risky and, when comparing its historical volatility, Daou Technology is 3.08 times less risky than GenoFocus. The stock trades about -0.02 of its potential returns per unit of risk. The GenoFocus is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 411,000 in GenoFocus on September 13, 2024 and sell it today you would earn a total of 2,000 from holding GenoFocus or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Daou Technology vs. GenoFocus
Performance |
| Timeline |
| Daou Technology |
| GenoFocus |
Daou Technology and GenoFocus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Technology and GenoFocus
The main advantage of trading using opposite Daou Technology and GenoFocus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Technology position performs unexpectedly, GenoFocus 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 GenoFocus will offset losses from the drop in GenoFocus' long position.| Daou Technology vs. Samsung Electronics Co | Daou Technology vs. Samsung Electronics Co | Daou Technology vs. SK Hynix | Daou Technology vs. POSCO Holdings |
| GenoFocus vs. LG Chemicals | GenoFocus vs. POSCO Holdings | GenoFocus vs. Hanwha Solutions | GenoFocus vs. Lotte Chemical Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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