Correlation Between Genie Music and Shinil Electronics

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

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

Diversification Opportunities for Genie Music and Shinil Electronics

0.32

Correlation Coefficient

Genie Music  Shinil Electronics

Weak diversification

The 3 months correlation between Genie and Shinil is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Shinil Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinil Electronics and Genie Music 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 Genie Music are associated (or correlated) with Shinil Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinil Electronics has no effect on the direction of Genie Music i.e., Genie Music and Shinil Electronics go up and down completely randomly.

Pair Corralation between Genie Music and Shinil Electronics

Assuming the 90 days trading horizon Genie Music is expected to under-perform the Shinil Electronics. In addition to that, Genie Music is 1.91 times more volatile than Shinil Electronics Co. It trades about -0.08 of its total potential returns per unit of risk. Shinil Electronics Co is currently generating about 0.08 per unit of volatility. If you would invest  143,795  in Shinil Electronics Co on December 24, 2024 and sell it today you would earn a total of  6,105  from holding Shinil Electronics Co or generate 4.25% return on investment over 90 days.

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

Genie Music  vs.  Shinil Electronics Co

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.

Shinil Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shinil Electronics Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinil Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genie Music and Shinil Electronics

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

The idea behind Genie Music and Shinil Electronics Co 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.