Correlation Between Genetec Technology and EA Technique

Can any of the company-specific risk be diversified away by investing in both Genetec Technology and EA Technique 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 Genetec Technology and EA Technique into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genetec Technology Bhd and EA Technique M, you can compare the effects of market volatilities on Genetec Technology and EA Technique 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 Genetec Technology with a short position of EA Technique. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genetec Technology and EA Technique.

Diversification Opportunities for Genetec Technology and EA Technique

-0.02

Correlation Coefficient

Genetec Technology  EA Technique

Good diversification

The 3 months correlation between Genetec and 5259 is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Genetec Technology Bhd and EA Technique M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Technique M and Genetec Technology 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 Genetec Technology Bhd are associated (or correlated) with EA Technique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Technique M has no effect on the direction of Genetec Technology i.e., Genetec Technology and EA Technique go up and down completely randomly.

Pair Corralation between Genetec Technology and EA Technique

Assuming the 90 days trading horizon Genetec Technology Bhd is expected to generate 4.26 times more return on investment than EA Technique. However, Genetec Technology is 4.26 times more volatile than EA Technique M. It trades about 0.12 of its potential returns per unit of risk. EA Technique M is currently generating about 0.01 per unit of risk. If you would invest  82.00  in Genetec Technology Bhd on September 12, 2024 and sell it today you would earn a total of  42.00  from holding Genetec Technology Bhd or generate 51.22% return on investment over 90 days.

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

Genetec Technology Bhd  vs.  EA Technique M

Genetec Technology Bhd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genetec Technology Bhd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Genetec Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

EA Technique M

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EA Technique M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, EA Technique is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Genetec Technology and EA Technique

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

The idea behind Genetec Technology Bhd and EA Technique M 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.