Correlation Between Genovate Biotechnology and STL Technology
Can any of the company-specific risk be diversified away by investing in both Genovate Biotechnology and STL 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 Genovate Biotechnology and STL Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genovate Biotechnology Co and STL Technology Co, you can compare the effects of market volatilities on Genovate Biotechnology and STL 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 Genovate Biotechnology with a short position of STL Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genovate Biotechnology and STL Technology.
Diversification Opportunities for Genovate Biotechnology and STL Technology
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Genovate and STL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Genovate Biotechnology Co and STL Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STL Technology and Genovate 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 Genovate Biotechnology Co are associated (or correlated) with STL Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STL Technology has no effect on the direction of Genovate Biotechnology i.e., Genovate Biotechnology and STL Technology go up and down completely randomly.
Pair Corralation between Genovate Biotechnology and STL Technology
Assuming the 90 days trading horizon Genovate Biotechnology Co is expected to under-perform the STL Technology. But the stock apears to be less risky and, when comparing its historical volatility, Genovate Biotechnology Co is 13.28 times less risky than STL Technology. The stock trades about -0.27 of its potential returns per unit of risk. The STL Technology Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3,905 in STL Technology Co on September 12, 2024 and sell it today you would earn a total of 1,895 from holding STL Technology Co or generate 48.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Genovate Biotechnology Co vs. STL Technology Co
Performance |
| Timeline |
| Genovate Biotechnology |
| STL Technology |
Genovate Biotechnology and STL Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genovate Biotechnology and STL Technology
The main advantage of trading using opposite Genovate Biotechnology and STL Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genovate Biotechnology position performs unexpectedly, STL 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 STL Technology will offset losses from the drop in STL Technology's long position.The idea behind Genovate Biotechnology Co and STL Technology 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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