Correlation Between Genomtec and Text SA
Can any of the company-specific risk be diversified away by investing in both Genomtec and Text SA 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 Genomtec and Text SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genomtec SA and Text SA, you can compare the effects of market volatilities on Genomtec and Text SA 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 Genomtec with a short position of Text SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genomtec and Text SA.
Diversification Opportunities for Genomtec and Text SA
Average diversification
The 3 months correlation between Genomtec and Text is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Genomtec SA and Text SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Text SA and Genomtec 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 Genomtec SA are associated (or correlated) with Text SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Text SA has no effect on the direction of Genomtec i.e., Genomtec and Text SA go up and down completely randomly.
Pair Corralation between Genomtec and Text SA
Assuming the 90 days trading horizon Genomtec SA is expected to under-perform the Text SA. But the stock apears to be less risky and, when comparing its historical volatility, Genomtec SA is 1.18 times less risky than Text SA. The stock trades about -0.33 of its potential returns per unit of risk. The Text SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,910 in Text SA on September 5, 2024 and sell it today you would earn a total of 560.00 from holding Text SA or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genomtec SA vs. Text SA
Performance |
| Timeline |
| Genomtec SA |
| Text SA |
Genomtec and Text SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genomtec and Text SA
The main advantage of trading using opposite Genomtec and Text SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genomtec position performs unexpectedly, Text SA 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 Text SA will offset losses from the drop in Text SA's long position.| Genomtec vs. Banco Santander SA | Genomtec vs. UniCredit SpA | Genomtec vs. CEZ as | Genomtec vs. Polski Koncern Naftowy |
| Text SA vs. Banco Santander SA | Text SA vs. UniCredit SpA | Text SA vs. CEZ as | Text SA vs. Polski Koncern Naftowy |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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