Correlation Between Newmax Technology and Genius Electronic
Can any of the company-specific risk be diversified away by investing in both Newmax Technology and Genius Electronic 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 Newmax Technology and Genius Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmax Technology Co and Genius Electronic Optical, you can compare the effects of market volatilities on Newmax Technology and Genius Electronic 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 Newmax Technology with a short position of Genius Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmax Technology and Genius Electronic.
Diversification Opportunities for Newmax Technology and Genius Electronic
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Newmax and Genius is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Newmax Technology Co and Genius Electronic Optical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Electronic Optical and Newmax Technology 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 Newmax Technology Co are associated (or correlated) with Genius Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Electronic Optical has no effect on the direction of Newmax Technology i.e., Newmax Technology and Genius Electronic go up and down completely randomly.
Pair Corralation between Newmax Technology and Genius Electronic
Assuming the 90 days trading horizon Newmax Technology Co is expected to generate 1.33 times more return on investment than Genius Electronic. However, Newmax Technology is 1.33 times more volatile than Genius Electronic Optical. It trades about -0.02 of its potential returns per unit of risk. Genius Electronic Optical is currently generating about -0.09 per unit of risk. If you would invest 2,760 in Newmax Technology Co on November 2, 2024 and sell it today you would lose (235.00) from holding Newmax Technology Co or give up 8.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newmax Technology Co vs. Genius Electronic Optical
Performance |
| Timeline |
| Newmax Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Genius Electronic Optical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Newmax Technology and Genius Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newmax Technology and Genius Electronic
The main advantage of trading using opposite Newmax Technology and Genius Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmax Technology position performs unexpectedly, Genius Electronic 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 Genius Electronic will offset losses from the drop in Genius Electronic's long position.The idea behind Newmax Technology Co and Genius Electronic Optical 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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