Correlation Between Genovate Biotechnology and U Ming

Can any of the company-specific risk be diversified away by investing in both Genovate Biotechnology and U Ming 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 Genovate Biotechnology and U Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genovate Biotechnology Co and U Ming Marine Transport, you can compare the effects of market volatilities on Genovate Biotechnology and U Ming 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 Genovate Biotechnology with a short position of U Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genovate Biotechnology and U Ming.

Diversification Opportunities for Genovate Biotechnology and U Ming

0.58

Correlation Coefficient

Genovate Biotechnology  U Ming

Very weak diversification

The 3 months correlation between Genovate and 2606 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Genovate Biotechnology Co and U Ming Marine Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Ming Marine and Genovate Biotechnology 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 Genovate Biotechnology Co are associated (or correlated) with U Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Ming Marine has no effect on the direction of Genovate Biotechnology i.e., Genovate Biotechnology and U Ming go up and down completely randomly.

Pair Corralation between Genovate Biotechnology and U Ming

Assuming the 90 days trading horizon Genovate Biotechnology is expected to generate 3.47 times less return on investment than U Ming. But when comparing it to its historical volatility, Genovate Biotechnology Co is 1.39 times less risky than U Ming. It trades about 0.06 of its potential returns per unit of risk. U Ming Marine Transport is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,660  in U Ming Marine Transport on December 25, 2024 and sell it today you would earn a total of  1,360  from holding U Ming Marine Transport or generate 24.03% return on investment over 90 days.

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

Genovate Biotechnology Co  vs.  U Ming Marine Transport

Genovate Biotechnology

Risk-Adjusted Performance

OK

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

U Ming Marine

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, U Ming showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genovate Biotechnology and U Ming

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

The idea behind Genovate Biotechnology Co and U Ming Marine Transport 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.