Correlation Between Ares International and Genesis Technology
Can any of the company-specific risk be diversified away by investing in both Ares International and Genesis Technology 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 Ares International and Genesis Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares International Corp and Genesis Technology, you can compare the effects of market volatilities on Ares International and Genesis Technology 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 Ares International with a short position of Genesis Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares International and Genesis Technology.
Diversification Opportunities for Ares International and Genesis Technology
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ares and Genesis is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ares International Corp and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology and Ares International 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 Ares International Corp are associated (or correlated) with Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of Ares International i.e., Ares International and Genesis Technology go up and down completely randomly.
Pair Corralation between Ares International and Genesis Technology
Assuming the 90 days trading horizon Ares International Corp is expected to under-perform the Genesis Technology. In addition to that, Ares International is 3.88 times more volatile than Genesis Technology. It trades about -0.15 of its total potential returns per unit of risk. Genesis Technology is currently generating about -0.25 per unit of volatility. If you would invest 6,660 in Genesis Technology on August 28, 2024 and sell it today you would lose (80.00) from holding Genesis Technology or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares International Corp vs. Genesis Technology
Performance |
| Timeline |
| Ares International Corp |
| Genesis Technology |
Ares International and Genesis Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares International and Genesis Technology
The main advantage of trading using opposite Ares International and Genesis Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares International position performs unexpectedly, Genesis Technology 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 Genesis Technology will offset losses from the drop in Genesis Technology's long position.The idea behind Ares International Corp and Genesis Technology 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.| Genesis Technology vs. Acer E Enabling Service | Genesis Technology vs. Sysage Technology Co | Genesis Technology vs. Syscom Computer Engineering | Genesis Technology vs. Jetwell Computer Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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