Correlation Between Moonbae Steel and Genie Music

Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and Genie Music 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 Moonbae Steel and Genie Music into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moonbae Steel and Genie Music, you can compare the effects of market volatilities on Moonbae Steel and Genie Music 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 Moonbae Steel with a short position of Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Genie Music.

Diversification Opportunities for Moonbae Steel and Genie Music

-0.07

Correlation Coefficient

Moonbae Steel  Genie Music

Good diversification

The 3 months correlation between Moonbae and Genie is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music and Moonbae Steel 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 Moonbae Steel are associated (or correlated) with Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Genie Music go up and down completely randomly.

Pair Corralation between Moonbae Steel and Genie Music

Assuming the 90 days trading horizon Moonbae Steel is expected to generate 1.57 times more return on investment than Genie Music. However, Moonbae Steel is 1.57 times more volatile than Genie Music. It trades about 0.09 of its potential returns per unit of risk. Genie Music is currently generating about -0.08 per unit of risk. If you would invest  224,107  in Moonbae Steel on December 24, 2024 and sell it today you would earn a total of  28,393  from holding Moonbae Steel or generate 12.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Moonbae Steel  vs.  Genie Music

Moonbae Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Moonbae Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Genie Music

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genie Music has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Moonbae Steel and Genie Music

The main advantage of trading using opposite Moonbae Steel and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music's long position.

The idea behind Moonbae Steel and Genie Music 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.