Correlation Between Thinking Electronic and Genesis Technology

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

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

Diversification Opportunities for Thinking Electronic and Genesis Technology

0.75

Correlation Coefficient

Thinking Electronic  Genesis Technology

Poor diversification

The 3 months correlation between Thinking and Genesis is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Thinking Electronic Industrial and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology and Thinking Electronic 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 Thinking Electronic Industrial are associated (or correlated) with Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of Thinking Electronic i.e., Thinking Electronic and Genesis Technology go up and down completely randomly.

Pair Corralation between Thinking Electronic and Genesis Technology

Assuming the 90 days trading horizon Thinking Electronic Industrial is expected to generate 0.59 times more return on investment than Genesis Technology. However, Thinking Electronic Industrial is 1.7 times less risky than Genesis Technology. It trades about 0.03 of its potential returns per unit of risk. Genesis Technology is currently generating about 0.01 per unit of risk. If you would invest  15,500  in Thinking Electronic Industrial on December 25, 2024 and sell it today you would earn a total of  300.00  from holding Thinking Electronic Industrial or generate 1.94% return on investment over 90 days.

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

Thinking Electronic Industrial  vs.  Genesis Technology

Thinking Electronic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thinking Electronic Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Thinking Electronic is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Genesis Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genesis Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Genesis Technology 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 Thinking Electronic and Genesis Technology

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

The idea behind Thinking Electronic Industrial and Genesis Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.