Correlation Between Primax Electronics and Generalplus Technology

Can any of the company-specific risk be diversified away by investing in both Primax Electronics and Generalplus Technology 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 Primax Electronics and Generalplus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Primax Electronics and Generalplus Technology, you can compare the effects of market volatilities on Primax Electronics and Generalplus Technology 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 Primax Electronics with a short position of Generalplus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primax Electronics and Generalplus Technology.

Diversification Opportunities for Primax Electronics and Generalplus Technology

0.58

Correlation Coefficient

Primax Electronics  Generalplus Technology

Very weak diversification

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

Pair Corralation between Primax Electronics and Generalplus Technology

Assuming the 90 days trading horizon Primax Electronics is expected to generate 0.96 times more return on investment than Generalplus Technology. However, Primax Electronics is 1.04 times less risky than Generalplus Technology. It trades about 0.05 of its potential returns per unit of risk. Generalplus Technology is currently generating about 0.02 per unit of risk. If you would invest  5,510  in Primax Electronics on September 13, 2024 and sell it today you would earn a total of  2,190  from holding Primax Electronics or generate 39.75% return on investment over 90 days.

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

Primax Electronics  vs.  Generalplus Technology

Primax Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primax Electronics 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.

Generalplus Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Generalplus Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Generalplus Technology 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 Primax Electronics and Generalplus Technology

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

The idea behind Primax Electronics and Generalplus Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.