Correlation Between Altek Corp and Genius Electronic

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

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

Diversification Opportunities for Altek Corp and Genius Electronic

-0.08

Correlation Coefficient

Altek Corp  Genius Electronic

Good diversification

The 3 months correlation between Altek and Genius is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Altek Corp and Genius Electronic Optical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Electronic Optical and Altek Corp 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 Altek Corp are associated (or correlated) with Genius Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Electronic Optical has no effect on the direction of Altek Corp i.e., Altek Corp and Genius Electronic go up and down completely randomly.

Pair Corralation between Altek Corp and Genius Electronic

Assuming the 90 days trading horizon Altek Corp is expected to generate 1.78 times more return on investment than Genius Electronic. However, Altek Corp is 1.78 times more volatile than Genius Electronic Optical. It trades about 0.05 of its potential returns per unit of risk. Genius Electronic Optical is currently generating about -0.21 per unit of risk. If you would invest  3,785  in Altek Corp on December 30, 2024 and sell it today you would earn a total of  240.00  from holding Altek Corp or generate 6.34% return on investment over 90 days.

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

Altek Corp  vs.  Genius Electronic Optical

Altek Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altek Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Altek Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Genius Electronic Optical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genius Electronic Optical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Altek Corp and Genius Electronic

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

The idea behind Altek Corp and Genius Electronic Optical 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.