Correlation Between Cytogen and Genolution

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

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

Diversification Opportunities for Cytogen and Genolution

0.59

Correlation Coefficient

Cytogen  Genolution

Very weak diversification

The 3 months correlation between Cytogen and Genolution is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cytogen and Genolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genolution and Cytogen 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 Cytogen are associated (or correlated) with Genolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genolution has no effect on the direction of Cytogen i.e., Cytogen and Genolution go up and down completely randomly.

Pair Corralation between Cytogen and Genolution

Assuming the 90 days trading horizon Cytogen is expected to under-perform the Genolution. In addition to that, Cytogen is 1.34 times more volatile than Genolution. It trades about -0.04 of its total potential returns per unit of risk. Genolution is currently generating about -0.04 per unit of volatility. If you would invest  429,500  in Genolution on September 24, 2024 and sell it today you would lose (211,500) from holding Genolution or give up 49.24% of portfolio value over 90 days.

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

Cytogen  vs.  Genolution

Cytogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cytogen 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.

Genolution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genolution 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.

Pair Trading with Cytogen and Genolution

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

The idea behind Cytogen and Genolution 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.