Correlation Between Generalplus Technology and Primax Electronics

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

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

Diversification Opportunities for Generalplus Technology and Primax Electronics

0.58

Correlation Coefficient

Generalplus Technology  Primax Electronics

Very weak diversification

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

Pair Corralation between Generalplus Technology and Primax Electronics

Assuming the 90 days trading horizon Generalplus Technology is expected to generate 0.91 times more return on investment than Primax Electronics. However, Generalplus Technology is 1.1 times less risky than Primax Electronics. It trades about 0.02 of its potential returns per unit of risk. Primax Electronics is currently generating about -0.06 per unit of risk. If you would invest  5,160  in Generalplus Technology on September 13, 2024 and sell it today you would earn a total of  100.00  from holding Generalplus Technology or generate 1.94% return on investment over 90 days.

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

Generalplus Technology  vs.  Primax Electronics

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.

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.

Pair Trading with Generalplus Technology and Primax Electronics

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

The idea behind Generalplus Technology and Primax Electronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.