Correlation Between GenMont Biotech and StShine Optical
Can any of the company-specific risk be diversified away by investing in both GenMont Biotech and StShine Optical 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 GenMont Biotech and StShine Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GenMont Biotech and StShine Optical Co, you can compare the effects of market volatilities on GenMont Biotech and StShine Optical 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 GenMont Biotech with a short position of StShine Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GenMont Biotech and StShine Optical.
Diversification Opportunities for GenMont Biotech and StShine Optical
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GenMont and StShine is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding GenMont Biotech and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical and GenMont Biotech 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 GenMont Biotech are associated (or correlated) with StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of GenMont Biotech i.e., GenMont Biotech and StShine Optical go up and down completely randomly.
Pair Corralation between GenMont Biotech and StShine Optical
Assuming the 90 days trading horizon GenMont Biotech is expected to generate 0.73 times more return on investment than StShine Optical. However, GenMont Biotech is 1.36 times less risky than StShine Optical. It trades about 0.03 of its potential returns per unit of risk. StShine Optical Co is currently generating about -0.07 per unit of risk. If you would invest 2,000 in GenMont Biotech on November 8, 2024 and sell it today you would earn a total of 10.00 from holding GenMont Biotech or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GenMont Biotech vs. StShine Optical Co
Performance |
| Timeline |
| GenMont Biotech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| StShine Optical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GenMont Biotech and StShine Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GenMont Biotech and StShine Optical
The main advantage of trading using opposite GenMont Biotech and StShine Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GenMont Biotech position performs unexpectedly, StShine Optical 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 StShine Optical will offset losses from the drop in StShine Optical's long position.The idea behind GenMont Biotech and StShine Optical Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |