Correlation Between GeneFerm Biotechnology and Huang Hsiang

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

By analyzing existing cross correlation between GeneFerm Biotechnology Co and Huang Hsiang Construction, you can compare the effects of market volatilities on GeneFerm Biotechnology and Huang Hsiang 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 GeneFerm Biotechnology with a short position of Huang Hsiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeneFerm Biotechnology and Huang Hsiang.

Diversification Opportunities for GeneFerm Biotechnology and Huang Hsiang

0.77

Correlation Coefficient

GeneFerm Biotechnology  Huang Hsiang

Poor diversification

The 3 months correlation between GeneFerm and Huang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GeneFerm Biotechnology Co and Huang Hsiang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huang Hsiang Construction and GeneFerm Biotechnology 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 GeneFerm Biotechnology Co are associated (or correlated) with Huang Hsiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huang Hsiang Construction has no effect on the direction of GeneFerm Biotechnology i.e., GeneFerm Biotechnology and Huang Hsiang go up and down completely randomly.

Pair Corralation between GeneFerm Biotechnology and Huang Hsiang

Assuming the 90 days trading horizon GeneFerm Biotechnology Co is expected to generate 1.42 times more return on investment than Huang Hsiang. However, GeneFerm Biotechnology is 1.42 times more volatile than Huang Hsiang Construction. It trades about 0.09 of its potential returns per unit of risk. Huang Hsiang Construction is currently generating about 0.0 per unit of risk. If you would invest  4,975  in GeneFerm Biotechnology Co on December 8, 2024 and sell it today you would earn a total of  645.00  from holding GeneFerm Biotechnology Co or generate 12.96% return on investment over 90 days.

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

GeneFerm Biotechnology Co  vs.  Huang Hsiang Construction

GeneFerm Biotechnology

Risk-Adjusted Performance

OK

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

Huang Hsiang Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huang Hsiang Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Huang Hsiang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GeneFerm Biotechnology and Huang Hsiang

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

The idea behind GeneFerm Biotechnology Co and Huang Hsiang Construction 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 Transaction History module to view history of all your transactions and understand their impact on performance.