Correlation Between Oceanic Beverages and GenMont Biotech

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

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

Diversification Opportunities for Oceanic Beverages and GenMont Biotech

-0.4

Correlation Coefficient

Oceanic Beverages  GenMont Biotech

Very good diversification

The 3 months correlation between Oceanic and GenMont is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Beverages Co and GenMont Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GenMont Biotech and Oceanic Beverages 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 Oceanic Beverages Co are associated (or correlated) with GenMont Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GenMont Biotech has no effect on the direction of Oceanic Beverages i.e., Oceanic Beverages and GenMont Biotech go up and down completely randomly.

Pair Corralation between Oceanic Beverages and GenMont Biotech

Assuming the 90 days trading horizon Oceanic Beverages Co is expected to under-perform the GenMont Biotech. In addition to that, Oceanic Beverages is 2.39 times more volatile than GenMont Biotech. It trades about -0.11 of its total potential returns per unit of risk. GenMont Biotech is currently generating about -0.04 per unit of volatility. If you would invest  1,960  in GenMont Biotech on October 23, 2024 and sell it today you would lose (15.00) from holding GenMont Biotech or give up 0.77% of portfolio value over 90 days.

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

Oceanic Beverages Co  vs.  GenMont Biotech

Oceanic Beverages

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oceanic Beverages Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Oceanic Beverages showed solid returns over the last few months and may actually be approaching a breakup point.

GenMont Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GenMont Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Oceanic Beverages and GenMont Biotech

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

The idea behind Oceanic Beverages Co and GenMont Biotech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.