Correlation Between Genie Music and Homecast CoLtd
Can any of the company-specific risk be diversified away by investing in both Genie Music and Homecast CoLtd 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 Genie Music and Homecast CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Music and Homecast CoLtd, you can compare the effects of market volatilities on Genie Music and Homecast CoLtd 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 Genie Music with a short position of Homecast CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Music and Homecast CoLtd.
Diversification Opportunities for Genie Music and Homecast CoLtd
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Genie and Homecast is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Homecast CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homecast CoLtd and Genie Music 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 Genie Music are associated (or correlated) with Homecast CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homecast CoLtd has no effect on the direction of Genie Music i.e., Genie Music and Homecast CoLtd go up and down completely randomly.
Pair Corralation between Genie Music and Homecast CoLtd
Assuming the 90 days trading horizon Genie Music is expected to generate 1.3 times more return on investment than Homecast CoLtd. However, Genie Music is 1.3 times more volatile than Homecast CoLtd. It trades about 0.02 of its potential returns per unit of risk. Homecast CoLtd is currently generating about -0.21 per unit of risk. If you would invest 217,000 in Genie Music on September 27, 2024 and sell it today you would earn a total of 1,000.00 from holding Genie Music or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Music vs. Homecast CoLtd
Performance |
| Timeline |
| Genie Music |
| Homecast CoLtd |
Genie Music and Homecast CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Music and Homecast CoLtd
The main advantage of trading using opposite Genie Music and Homecast CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Music position performs unexpectedly, Homecast CoLtd 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 Homecast CoLtd will offset losses from the drop in Homecast CoLtd's long position.| Genie Music vs. Homecast CoLtd | Genie Music vs. Cuckoo Homesys Co | Genie Music vs. Home Center Holdings | Genie Music vs. SH Energy Chemical |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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