Correlation Between SFP Tech and Genetec Technology

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

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

Diversification Opportunities for SFP Tech and Genetec Technology

0.84

Correlation Coefficient

SFP Tech  Genetec Technology

Very poor diversification

The 3 months correlation between SFP and Genetec is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Genetec Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetec Technology Bhd and SFP Tech 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 SFP Tech Holdings are associated (or correlated) with Genetec Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetec Technology Bhd has no effect on the direction of SFP Tech i.e., SFP Tech and Genetec Technology go up and down completely randomly.

Pair Corralation between SFP Tech and Genetec Technology

Assuming the 90 days trading horizon SFP Tech Holdings is expected to under-perform the Genetec Technology. But the stock apears to be less risky and, when comparing its historical volatility, SFP Tech Holdings is 1.56 times less risky than Genetec Technology. The stock trades about -0.18 of its potential returns per unit of risk. The Genetec Technology Bhd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Genetec Technology Bhd on December 31, 2024 and sell it today you would earn a total of  37.00  from holding Genetec Technology Bhd or generate 45.12% return on investment over 90 days.

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

SFP Tech Holdings  vs.  Genetec Technology Bhd

SFP Tech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFP Tech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Genetec Technology Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genetec Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with SFP Tech and Genetec Technology

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

The idea behind SFP Tech Holdings and Genetec Technology Bhd 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.