Correlation Between GeneFerm Biotechnology and Green World
Can any of the company-specific risk be diversified away by investing in both GeneFerm Biotechnology and Green World 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 GeneFerm Biotechnology and Green World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GeneFerm Biotechnology Co and Green World Fintech, you can compare the effects of market volatilities on GeneFerm Biotechnology and Green World 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 GeneFerm Biotechnology with a short position of Green World. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeneFerm Biotechnology and Green World.
Diversification Opportunities for GeneFerm Biotechnology and Green World
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GeneFerm and Green is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GeneFerm Biotechnology Co and Green World Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green World Fintech and GeneFerm Biotechnology 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 GeneFerm Biotechnology Co are associated (or correlated) with Green World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green World Fintech has no effect on the direction of GeneFerm Biotechnology i.e., GeneFerm Biotechnology and Green World go up and down completely randomly.
Pair Corralation between GeneFerm Biotechnology and Green World
Assuming the 90 days trading horizon GeneFerm Biotechnology Co is expected to under-perform the Green World. But the stock apears to be less risky and, when comparing its historical volatility, GeneFerm Biotechnology Co is 1.69 times less risky than Green World. The stock trades about -0.08 of its potential returns per unit of risk. The Green World Fintech is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,958 in Green World Fintech on September 14, 2024 and sell it today you would earn a total of 3,842 from holding Green World Fintech or generate 129.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GeneFerm Biotechnology Co vs. Green World Fintech
Performance |
| Timeline |
| GeneFerm Biotechnology |
| Green World Fintech |
GeneFerm Biotechnology and Green World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GeneFerm Biotechnology and Green World
The main advantage of trading using opposite GeneFerm Biotechnology and Green World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeneFerm Biotechnology position performs unexpectedly, Green World 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 Green World will offset losses from the drop in Green World's long position.The idea behind GeneFerm Biotechnology Co and Green World Fintech 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.
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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