Correlation Between Genovate Biotechnology and Kenmec Mechanical
Can any of the company-specific risk be diversified away by investing in both Genovate Biotechnology and Kenmec Mechanical 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 Kenmec Mechanical 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 Kenmec Mechanical Engineering, you can compare the effects of market volatilities on Genovate Biotechnology and Kenmec Mechanical 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 Kenmec Mechanical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genovate Biotechnology and Kenmec Mechanical.
Diversification Opportunities for Genovate Biotechnology and Kenmec Mechanical
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Genovate and Kenmec is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Genovate Biotechnology Co and Kenmec Mechanical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmec Mechanical 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 Kenmec Mechanical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenmec Mechanical has no effect on the direction of Genovate Biotechnology i.e., Genovate Biotechnology and Kenmec Mechanical go up and down completely randomly.
Pair Corralation between Genovate Biotechnology and Kenmec Mechanical
Assuming the 90 days trading horizon Genovate Biotechnology is expected to generate 4.56 times less return on investment than Kenmec Mechanical. In addition to that, Genovate Biotechnology is 1.54 times more volatile than Kenmec Mechanical Engineering. It trades about 0.01 of its total potential returns per unit of risk. Kenmec Mechanical Engineering is currently generating about 0.09 per unit of volatility. If you would invest 2,578 in Kenmec Mechanical Engineering on September 1, 2024 and sell it today you would earn a total of 5,942 from holding Kenmec Mechanical Engineering or generate 230.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Genovate Biotechnology Co vs. Kenmec Mechanical Engineering
Performance |
| Timeline |
| Genovate Biotechnology |
| Kenmec Mechanical |
Genovate Biotechnology and Kenmec Mechanical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genovate Biotechnology and Kenmec Mechanical
The main advantage of trading using opposite Genovate Biotechnology and Kenmec Mechanical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genovate Biotechnology position performs unexpectedly, Kenmec Mechanical 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 Kenmec Mechanical will offset losses from the drop in Kenmec Mechanical's long position.| Genovate Biotechnology vs. Aker Technology Co | Genovate Biotechnology vs. V Tac Technology Co | Genovate Biotechnology vs. Tainet Communication System | Genovate Biotechnology vs. Microelectronics Technology |
| Kenmec Mechanical vs. Genovate Biotechnology Co | Kenmec Mechanical vs. Formosa Chemicals Fibre | Kenmec Mechanical vs. Asmedia Technology | Kenmec Mechanical vs. BenQ Medical Technology |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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