Correlation Between A-Tech Solution and GeneBioTech
Can any of the company-specific risk be diversified away by investing in both A-Tech Solution and GeneBioTech 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 A-Tech Solution and GeneBioTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Tech Solution Co and GeneBioTech Co, you can compare the effects of market volatilities on A-Tech Solution and GeneBioTech 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 A-Tech Solution with a short position of GeneBioTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of A-Tech Solution and GeneBioTech.
Diversification Opportunities for A-Tech Solution and GeneBioTech
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between A-Tech and GeneBioTech is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding A Tech Solution Co and GeneBioTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneBioTech and A-Tech Solution 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 A Tech Solution Co are associated (or correlated) with GeneBioTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneBioTech has no effect on the direction of A-Tech Solution i.e., A-Tech Solution and GeneBioTech go up and down completely randomly.
Pair Corralation between A-Tech Solution and GeneBioTech
Assuming the 90 days trading horizon A Tech Solution Co is expected to under-perform the GeneBioTech. In addition to that, A-Tech Solution is 1.48 times more volatile than GeneBioTech Co. It trades about -0.02 of its total potential returns per unit of risk. GeneBioTech Co is currently generating about -0.01 per unit of volatility. If you would invest 397,500 in GeneBioTech Co on September 26, 2024 and sell it today you would lose (66,000) from holding GeneBioTech Co or give up 16.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
A Tech Solution Co vs. GeneBioTech Co
Performance |
| Timeline |
| A Tech Solution |
| GeneBioTech |
A-Tech Solution and GeneBioTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A-Tech Solution and GeneBioTech
The main advantage of trading using opposite A-Tech Solution and GeneBioTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A-Tech Solution position performs unexpectedly, GeneBioTech 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 GeneBioTech will offset losses from the drop in GeneBioTech's long position.| A-Tech Solution vs. Busan Industrial Co | A-Tech Solution vs. Busan Ind | A-Tech Solution vs. Mirae Asset Daewoo | A-Tech Solution vs. Shinhan WTI Futures |
| GeneBioTech vs. A Tech Solution Co | GeneBioTech vs. SS TECH | GeneBioTech vs. PJ Metal Co | GeneBioTech vs. Duksan Hi Metal |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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