Correlation Between Leaders Technology and Cytogen

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

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

Diversification Opportunities for Leaders Technology and Cytogen

0.68

Correlation Coefficient

Leaders Technology  Cytogen

Poor diversification

The 3 months correlation between Leaders and Cytogen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Leaders Technology Investment and Cytogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytogen and Leaders 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 Leaders Technology Investment are associated (or correlated) with Cytogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytogen has no effect on the direction of Leaders Technology i.e., Leaders Technology and Cytogen go up and down completely randomly.

Pair Corralation between Leaders Technology and Cytogen

Assuming the 90 days trading horizon Leaders Technology Investment is expected to generate 2.3 times more return on investment than Cytogen. However, Leaders Technology is 2.3 times more volatile than Cytogen. It trades about -0.01 of its potential returns per unit of risk. Cytogen is currently generating about -0.08 per unit of risk. If you would invest  29,000  in Leaders Technology Investment on December 25, 2024 and sell it today you would lose (3,100) from holding Leaders Technology Investment or give up 10.69% of portfolio value over 90 days.

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

Leaders Technology Investment  vs.  Cytogen

Leaders Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leaders Technology Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Leaders Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cytogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cytogen 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 Leaders Technology and Cytogen

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

The idea behind Leaders Technology Investment and Cytogen 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.