Correlation Between Digital China and Genesis Technology
Can any of the company-specific risk be diversified away by investing in both Digital China and Genesis 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 Digital China and Genesis Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital China Holdings and Genesis Technology, you can compare the effects of market volatilities on Digital China and Genesis 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 Digital China with a short position of Genesis Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and Genesis Technology.
Diversification Opportunities for Digital China and Genesis Technology
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Genesis is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Holdings and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology and Digital China 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 Digital China Holdings are associated (or correlated) with Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of Digital China i.e., Digital China and Genesis Technology go up and down completely randomly.
Pair Corralation between Digital China and Genesis Technology
Assuming the 90 days trading horizon Digital China Holdings is expected to generate 11.99 times more return on investment than Genesis Technology. However, Digital China is 11.99 times more volatile than Genesis Technology. It trades about 0.26 of its potential returns per unit of risk. Genesis Technology is currently generating about -0.43 per unit of risk. If you would invest 584.00 in Digital China Holdings on August 24, 2024 and sell it today you would earn a total of 98.00 from holding Digital China Holdings or generate 16.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital China Holdings vs. Genesis Technology
Performance |
| Timeline |
| Digital China Holdings |
| Genesis Technology |
Digital China and Genesis Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital China and Genesis Technology
The main advantage of trading using opposite Digital China and Genesis Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China position performs unexpectedly, Genesis 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 Genesis Technology will offset losses from the drop in Genesis Technology's long position.| Digital China vs. Acer E Enabling Service | Digital China vs. Sysage Technology Co | Digital China vs. Green World Fintech | Digital China vs. Genesis Technology |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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