Correlation Between Genting Plantations and Greatech Technology

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

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

Diversification Opportunities for Genting Plantations and Greatech Technology

0.3

Correlation Coefficient

Genting Plantations  Greatech Technology

Weak diversification

The 3 months correlation between Genting and Greatech is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Genting Plantations Bhd and Greatech Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatech Technology Bhd and Genting Plantations 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 Genting Plantations Bhd are associated (or correlated) with Greatech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatech Technology Bhd has no effect on the direction of Genting Plantations i.e., Genting Plantations and Greatech Technology go up and down completely randomly.

Pair Corralation between Genting Plantations and Greatech Technology

Assuming the 90 days trading horizon Genting Plantations is expected to generate 1.9 times less return on investment than Greatech Technology. But when comparing it to its historical volatility, Genting Plantations Bhd is 1.83 times less risky than Greatech Technology. It trades about 0.1 of its potential returns per unit of risk. Greatech Technology Bhd is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  204.00  in Greatech Technology Bhd on October 8, 2024 and sell it today you would earn a total of  27.00  from holding Greatech Technology Bhd or generate 13.24% return on investment over 90 days.

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

Genting Plantations Bhd  vs.  Greatech Technology Bhd

Genting Plantations Bhd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genting Plantations Bhd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Genting Plantations may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Greatech Technology Bhd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greatech Technology Bhd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Greatech Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genting Plantations and Greatech Technology

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

The idea behind Genting Plantations Bhd and Greatech Technology Bhd 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.