Correlation Between Generalplus Technology and Nishoku Technology

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

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

Diversification Opportunities for Generalplus Technology and Nishoku Technology

-0.02

Correlation Coefficient

Generalplus Technology  Nishoku Technology

Good diversification

The 3 months correlation between Generalplus and Nishoku is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Generalplus Technology and Nishoku Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nishoku Technology and Generalplus Technology 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 Generalplus Technology are associated (or correlated) with Nishoku Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nishoku Technology has no effect on the direction of Generalplus Technology i.e., Generalplus Technology and Nishoku Technology go up and down completely randomly.

Pair Corralation between Generalplus Technology and Nishoku Technology

Assuming the 90 days trading horizon Generalplus Technology is expected to generate 3.45 times less return on investment than Nishoku Technology. In addition to that, Generalplus Technology is 1.35 times more volatile than Nishoku Technology. It trades about 0.02 of its total potential returns per unit of risk. Nishoku Technology is currently generating about 0.08 per unit of volatility. If you would invest  11,000  in Nishoku Technology on December 4, 2024 and sell it today you would earn a total of  4,100  from holding Nishoku Technology or generate 37.27% return on investment over 90 days.

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

Generalplus Technology  vs.  Nishoku Technology

Generalplus Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Generalplus Technology has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Nishoku Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nishoku Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nishoku Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generalplus Technology and Nishoku Technology

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

The idea behind Generalplus Technology and Nishoku 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.