Correlation Between WPG Holdings and Genius Electronic

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

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

Diversification Opportunities for WPG Holdings and Genius Electronic

-0.2

Correlation Coefficient

WPG Holdings  Genius Electronic

Good diversification

The 3 months correlation between WPG and Genius is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding WPG Holdings 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 WPG Holdings 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 WPG Holdings 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 WPG Holdings i.e., WPG Holdings and Genius Electronic go up and down completely randomly.

Pair Corralation between WPG Holdings and Genius Electronic

Assuming the 90 days trading horizon WPG Holdings is expected to generate 0.87 times more return on investment than Genius Electronic. However, WPG Holdings is 1.15 times less risky than Genius Electronic. It trades about 0.05 of its potential returns per unit of risk. Genius Electronic Optical is currently generating about 0.04 per unit of risk. If you would invest  4,825  in WPG Holdings on October 11, 2024 and sell it today you would earn a total of  2,245  from holding WPG Holdings or generate 46.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

WPG Holdings  vs.  Genius Electronic Optical

WPG Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WPG Holdings 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.

Genius Electronic Optical

Risk-Adjusted Performance

0 of 100

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 fairly stable basic indicators, Genius Electronic 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 WPG Holdings and Genius Electronic

The main advantage of trading using opposite WPG Holdings and Genius Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPG Holdings 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 WPG Holdings 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.