Correlation Between Changsha DIALINE and Genus Power

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

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

Diversification Opportunities for Changsha DIALINE and Genus Power

-0.13

Correlation Coefficient

Changsha DIALINE  Genus Power

Good diversification

The 3 months correlation between Changsha and Genus is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Changsha DIALINE New and Genus Power Infrastructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genus Power Infrastr and Changsha DIALINE 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 Changsha DIALINE New are associated (or correlated) with Genus Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genus Power Infrastr has no effect on the direction of Changsha DIALINE i.e., Changsha DIALINE and Genus Power go up and down completely randomly.

Pair Corralation between Changsha DIALINE and Genus Power

Assuming the 90 days trading horizon Changsha DIALINE New is expected to generate 2.29 times more return on investment than Genus Power. However, Changsha DIALINE is 2.29 times more volatile than Genus Power Infrastructures. It trades about 0.14 of its potential returns per unit of risk. Genus Power Infrastructures is currently generating about 0.02 per unit of risk. If you would invest  581.00  in Changsha DIALINE New on September 2, 2024 and sell it today you would earn a total of  256.00  from holding Changsha DIALINE New or generate 44.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Changsha DIALINE New  vs.  Genus Power Infrastructures

Changsha DIALINE New

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Changsha DIALINE New are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Changsha DIALINE sustained solid returns over the last few months and may actually be approaching a breakup point.

Genus Power Infrastr

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genus Power Infrastructures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Genus Power is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Changsha DIALINE and Genus Power

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

The idea behind Changsha DIALINE New and Genus Power Infrastructures 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.