Correlation Between Medy Tox and Genexine

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Can any of the company-specific risk be diversified away by investing in both Medy Tox and Genexine 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 Medy Tox and Genexine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medy Tox and Genexine, you can compare the effects of market volatilities on Medy Tox and Genexine 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 Medy Tox with a short position of Genexine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medy Tox and Genexine.

Diversification Opportunities for Medy Tox and Genexine

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Medy and Genexine is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Medy Tox and Genexine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genexine and Medy Tox 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 Medy Tox are associated (or correlated) with Genexine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genexine has no effect on the direction of Medy Tox i.e., Medy Tox and Genexine go up and down completely randomly.

Pair Corralation between Medy Tox and Genexine

Assuming the 90 days trading horizon Medy Tox is expected to under-perform the Genexine. But the stock apears to be less risky and, when comparing its historical volatility, Medy Tox is 1.47 times less risky than Genexine. The stock trades about -0.14 of its potential returns per unit of risk. The Genexine is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  608,000  in Genexine on September 6, 2024 and sell it today you would lose (35,000) from holding Genexine or give up 5.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Medy Tox  vs.  Genexine

 Performance 
       Timeline  
Medy Tox 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Medy Tox has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Genexine 

Risk-Adjusted Performance

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

Medy Tox and Genexine Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Medy Tox and Genexine

The main advantage of trading using opposite Medy Tox and Genexine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medy Tox position performs unexpectedly, Genexine 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 Genexine will offset losses from the drop in Genexine's long position.
The idea behind Medy Tox and Genexine 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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