Correlation Between Genovate Biotechnology and Kao Fong

Can any of the company-specific risk be diversified away by investing in both Genovate Biotechnology and Kao Fong 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 Kao Fong 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 Kao Fong Machinery, you can compare the effects of market volatilities on Genovate Biotechnology and Kao Fong 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 Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genovate Biotechnology and Kao Fong.

Diversification Opportunities for Genovate Biotechnology and Kao Fong

0.19

Correlation Coefficient

Genovate Biotechnology  Kao Fong

Average diversification

The 3 months correlation between Genovate and Kao is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Genovate Biotechnology Co and Kao Fong Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kao Fong Machinery 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 Kao Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kao Fong Machinery has no effect on the direction of Genovate Biotechnology i.e., Genovate Biotechnology and Kao Fong go up and down completely randomly.

Pair Corralation between Genovate Biotechnology and Kao Fong

Assuming the 90 days trading horizon Genovate Biotechnology Co is expected to generate 0.56 times more return on investment than Kao Fong. However, Genovate Biotechnology Co is 1.77 times less risky than Kao Fong. It trades about 0.1 of its potential returns per unit of risk. Kao Fong Machinery is currently generating about 0.04 per unit of risk. If you would invest  2,080  in Genovate Biotechnology Co on December 24, 2024 and sell it today you would earn a total of  235.00  from holding Genovate Biotechnology Co or generate 11.3% return on investment over 90 days.

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

Genovate Biotechnology Co  vs.  Kao Fong Machinery

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 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Genovate Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Kao Fong Machinery

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kao Fong Machinery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kao Fong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Genovate Biotechnology and Kao Fong

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

The idea behind Genovate Biotechnology Co and Kao Fong Machinery 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.