Correlation Between GenMont Biotech and Wistron Information

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

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

Diversification Opportunities for GenMont Biotech and Wistron Information

-0.25

Correlation Coefficient

GenMont Biotech  Wistron Information

Very good diversification

The 3 months correlation between GenMont and Wistron is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding GenMont Biotech and Wistron Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Information and GenMont Biotech 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 GenMont Biotech are associated (or correlated) with Wistron Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Information has no effect on the direction of GenMont Biotech i.e., GenMont Biotech and Wistron Information go up and down completely randomly.

Pair Corralation between GenMont Biotech and Wistron Information

Assuming the 90 days trading horizon GenMont Biotech is expected to under-perform the Wistron Information. But the stock apears to be less risky and, when comparing its historical volatility, GenMont Biotech is 2.73 times less risky than Wistron Information. The stock trades about -0.23 of its potential returns per unit of risk. The Wistron Information Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11,350  in Wistron Information Technology on September 17, 2024 and sell it today you would earn a total of  1,500  from holding Wistron Information Technology or generate 13.22% return on investment over 90 days.

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

GenMont Biotech  vs.  Wistron Information Technology

GenMont Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GenMont Biotech 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.

Wistron Information

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wistron Information Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wistron Information showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GenMont Biotech and Wistron Information

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

The idea behind GenMont Biotech and Wistron Information 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .