Correlation Between Genius Electronic and General Interface

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

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

Diversification Opportunities for Genius Electronic and General Interface

0.1

Correlation Coefficient

Genius Electronic  General Interface

Average diversification

The 3 months correlation between Genius and General is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Genius Electronic Optical and General Interface Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Interface and Genius 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 Genius Electronic Optical are associated (or correlated) with General Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Interface has no effect on the direction of Genius Electronic i.e., Genius Electronic and General Interface go up and down completely randomly.

Pair Corralation between Genius Electronic and General Interface

Assuming the 90 days trading horizon Genius Electronic Optical is expected to under-perform the General Interface. But the stock apears to be less risky and, when comparing its historical volatility, Genius Electronic Optical is 1.12 times less risky than General Interface. The stock trades about -0.06 of its potential returns per unit of risk. The General Interface Solution is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,790  in General Interface Solution on December 21, 2024 and sell it today you would earn a total of  500.00  from holding General Interface Solution or generate 10.44% return on investment over 90 days.

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

Genius Electronic Optical  vs.  General Interface Solution

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 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.

General Interface

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Interface Solution are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, General Interface showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genius Electronic and General Interface

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

The idea behind Genius Electronic Optical and General Interface Solution 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.