Correlation Between Te Chang and Genesis Technology

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

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

Diversification Opportunities for Te Chang and Genesis Technology

-0.79

Correlation Coefficient

Te Chang  Genesis Technology

Pay attention - limited upside

The 3 months correlation between 5511 and Genesis is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Te Chang Construction and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology and Te Chang 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 Te Chang Construction are associated (or correlated) with Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of Te Chang i.e., Te Chang and Genesis Technology go up and down completely randomly.

Pair Corralation between Te Chang and Genesis Technology

Assuming the 90 days trading horizon Te Chang Construction is expected to under-perform the Genesis Technology. But the stock apears to be less risky and, when comparing its historical volatility, Te Chang Construction is 1.43 times less risky than Genesis Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Genesis Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,350  in Genesis Technology on October 11, 2024 and sell it today you would earn a total of  100.00  from holding Genesis Technology or generate 1.57% return on investment over 90 days.

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

Te Chang Construction  vs.  Genesis Technology

Te Chang Construction

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Te Chang Construction are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Te Chang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Genesis Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Genesis 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 Te Chang and Genesis Technology

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

The idea behind Te Chang Construction and Genesis 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.