Correlation Between Genie Music and Solus Advanced

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Can any of the company-specific risk be diversified away by investing in both Genie Music and Solus Advanced 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 Solus Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Music and Solus Advanced Materials, you can compare the effects of market volatilities on Genie Music and Solus Advanced 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 Solus Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Music and Solus Advanced.

Diversification Opportunities for Genie Music and Solus Advanced

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Genie and Solus is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Solus Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solus Advanced Materials 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 Solus Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solus Advanced Materials has no effect on the direction of Genie Music i.e., Genie Music and Solus Advanced go up and down completely randomly.

Pair Corralation between Genie Music and Solus Advanced

Assuming the 90 days trading horizon Genie Music is expected to generate 1.03 times more return on investment than Solus Advanced. However, Genie Music is 1.03 times more volatile than Solus Advanced Materials. It trades about -0.26 of its potential returns per unit of risk. Solus Advanced Materials is currently generating about -0.37 per unit of risk. If you would invest  259,000  in Genie Music on August 29, 2024 and sell it today you would lose (42,000) from holding Genie Music or give up 16.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Genie Music  vs.  Solus Advanced Materials

 Performance 
       Timeline  
Genie Music 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Genie Music has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Genie Music is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Solus Advanced Materials 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Solus Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Genie Music and Solus Advanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Genie Music and Solus Advanced

The main advantage of trading using opposite Genie Music and Solus Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Music position performs unexpectedly, Solus Advanced 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 Solus Advanced will offset losses from the drop in Solus Advanced's long position.
The idea behind Genie Music and Solus Advanced Materials 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.
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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