Correlation Between Genovate Biotechnology and U Media
Can any of the company-specific risk be diversified away by investing in both Genovate Biotechnology and U Media 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 U Media 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 U Media Communications, you can compare the effects of market volatilities on Genovate Biotechnology and U Media 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 U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genovate Biotechnology and U Media.
Diversification Opportunities for Genovate Biotechnology and U Media
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Genovate and 6470 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Genovate Biotechnology Co and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications 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 U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Genovate Biotechnology i.e., Genovate Biotechnology and U Media go up and down completely randomly.
Pair Corralation between Genovate Biotechnology and U Media
Assuming the 90 days trading horizon Genovate Biotechnology Co is expected to generate 2.0 times more return on investment than U Media. However, Genovate Biotechnology is 2.0 times more volatile than U Media Communications. It trades about 0.27 of its potential returns per unit of risk. U Media Communications is currently generating about -0.34 per unit of risk. If you would invest 2,070 in Genovate Biotechnology Co on November 3, 2024 and sell it today you would earn a total of 320.00 from holding Genovate Biotechnology Co or generate 15.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genovate Biotechnology Co vs. U Media Communications
Performance |
| Timeline |
| Genovate Biotechnology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| U Media Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Genovate Biotechnology and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genovate Biotechnology and U Media
The main advantage of trading using opposite Genovate Biotechnology and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genovate Biotechnology position performs unexpectedly, U Media 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 U Media will offset losses from the drop in U Media's long position.The idea behind Genovate Biotechnology Co and U Media Communications 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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