Correlation Between Genie Music and Formetal
Can any of the company-specific risk be diversified away by investing in both Genie Music and Formetal 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 Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Music and Formetal Co, you can compare the effects of market volatilities on Genie Music and Formetal 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 Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Music and Formetal.
Diversification Opportunities for Genie Music and Formetal
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Genie and Formetal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal 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 Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Genie Music i.e., Genie Music and Formetal go up and down completely randomly.
Pair Corralation between Genie Music and Formetal
Assuming the 90 days trading horizon Genie Music is expected to under-perform the Formetal. In addition to that, Genie Music is 1.29 times more volatile than Formetal Co. It trades about -0.03 of its total potential returns per unit of risk. Formetal Co is currently generating about -0.01 per unit of volatility. If you would invest 320,500 in Formetal Co on September 21, 2024 and sell it today you would lose (24,000) from holding Formetal Co or give up 7.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Music vs. Formetal Co
Performance |
| Timeline |
| Genie Music |
| Formetal |
Genie Music and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Music and Formetal
The main advantage of trading using opposite Genie Music and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Music position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Genie Music vs. LG Household Healthcare | Genie Music vs. Daishin Information Communications | Genie Music vs. CG Hi Tech | Genie Music vs. BIT Computer Co |
| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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