Correlation Between Genovate Biotechnology and Lihtai Construction

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

Diversification Opportunities for Genovate Biotechnology and Lihtai Construction

0.3

Correlation Coefficient

Genovate Biotechnology  Lihtai Construction

Weak diversification

The 3 months correlation between Genovate and Lihtai is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Genovate Biotechnology Co and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction 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 Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Genovate Biotechnology i.e., Genovate Biotechnology and Lihtai Construction go up and down completely randomly.

Pair Corralation between Genovate Biotechnology and Lihtai Construction

Assuming the 90 days trading horizon Genovate Biotechnology Co is expected to generate 2.16 times more return on investment than Lihtai Construction. However, Genovate Biotechnology is 2.16 times more volatile than Lihtai Construction Enterprise. It trades about 0.04 of its potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about 0.01 per unit of risk. If you would invest  2,090  in Genovate Biotechnology Co on December 28, 2024 and sell it today you would earn a total of  80.00  from holding Genovate Biotechnology Co or generate 3.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Genovate Biotechnology Co  vs.  Lihtai Construction Enterprise

Genovate Biotechnology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genovate Biotechnology Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Genovate Biotechnology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lihtai Construction

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lihtai Construction Enterprise are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Lihtai Construction is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Genovate Biotechnology and Lihtai Construction

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

The idea behind Genovate Biotechnology Co and Lihtai Construction Enterprise 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.