Correlation Between Great China and Genovate Biotechnology
Can any of the company-specific risk be diversified away by investing in both Great China and Genovate Biotechnology 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 Great China and Genovate Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great China Metal and Genovate Biotechnology Co, you can compare the effects of market volatilities on Great China and Genovate Biotechnology 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 Great China with a short position of Genovate Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great China and Genovate Biotechnology.
Diversification Opportunities for Great China and Genovate Biotechnology
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great and Genovate is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Great China Metal and Genovate Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovate Biotechnology and Great 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 Great China Metal are associated (or correlated) with Genovate Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovate Biotechnology has no effect on the direction of Great China i.e., Great China and Genovate Biotechnology go up and down completely randomly.
Pair Corralation between Great China and Genovate Biotechnology
Assuming the 90 days trading horizon Great China Metal is expected to generate 0.96 times more return on investment than Genovate Biotechnology. However, Great China Metal is 1.04 times less risky than Genovate Biotechnology. It trades about 0.09 of its potential returns per unit of risk. Genovate Biotechnology Co is currently generating about -0.29 per unit of risk. If you would invest 2,285 in Great China Metal on August 30, 2024 and sell it today you would earn a total of 20.00 from holding Great China Metal or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great China Metal vs. Genovate Biotechnology Co
Performance |
| Timeline |
| Great China Metal |
| Genovate Biotechnology |
Great China and Genovate Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great China and Genovate Biotechnology
The main advantage of trading using opposite Great China and Genovate Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great China position performs unexpectedly, Genovate Biotechnology 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 Genovate Biotechnology will offset losses from the drop in Genovate Biotechnology's long position.| Great China vs. Taiwan Hon Chuan | Great China vs. Taiwan Secom Co | Great China vs. Taiwan Fu Hsing | Great China vs. Taiwan Shin Kong |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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