Correlation Between Transcend Information and Genovate Biotechnology

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

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

Diversification Opportunities for Transcend Information and Genovate Biotechnology

0.66

Correlation Coefficient

Transcend Information  Genovate Biotechnology

Poor diversification

The 3 months correlation between Transcend and Genovate is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Transcend Information and Genovate Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovate Biotechnology and Transcend Information 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 Transcend Information are associated (or correlated) with Genovate Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovate Biotechnology has no effect on the direction of Transcend Information i.e., Transcend Information and Genovate Biotechnology go up and down completely randomly.

Pair Corralation between Transcend Information and Genovate Biotechnology

Assuming the 90 days trading horizon Transcend Information is expected to under-perform the Genovate Biotechnology. In addition to that, Transcend Information is 1.83 times more volatile than Genovate Biotechnology Co. It trades about -0.13 of its total potential returns per unit of risk. Genovate Biotechnology Co is currently generating about -0.08 per unit of volatility. If you would invest  2,392  in Genovate Biotechnology Co on September 15, 2024 and sell it today you would lose (247.00) from holding Genovate Biotechnology Co or give up 10.33% of portfolio value over 90 days.

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

Transcend Information  vs.  Genovate Biotechnology Co

Transcend Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transcend Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Genovate Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genovate Biotechnology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Genovate Biotechnology 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 Transcend Information and Genovate Biotechnology

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

The idea behind Transcend Information and Genovate Biotechnology Co 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.