Correlation Between Genertec Universal and GUOTAI JUNAN

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

By analyzing existing cross correlation between Genertec Universal Medical and GUOTAI JUNAN SEC, you can compare the effects of market volatilities on Genertec Universal and GUOTAI JUNAN 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 Genertec Universal with a short position of GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genertec Universal and GUOTAI JUNAN.

Diversification Opportunities for Genertec Universal and GUOTAI JUNAN

0.38

Correlation Coefficient

Genertec Universal  GUOTAI JUNAN

Weak diversification

The 3 months correlation between Genertec and GUOTAI is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Genertec Universal Medical and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC and Genertec Universal 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 Genertec Universal Medical are associated (or correlated) with GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of Genertec Universal i.e., Genertec Universal and GUOTAI JUNAN go up and down completely randomly.

Pair Corralation between Genertec Universal and GUOTAI JUNAN

Assuming the 90 days horizon Genertec Universal is expected to generate 1.07 times less return on investment than GUOTAI JUNAN. In addition to that, Genertec Universal is 1.13 times more volatile than GUOTAI JUNAN SEC. It trades about 0.04 of its total potential returns per unit of risk. GUOTAI JUNAN SEC is currently generating about 0.05 per unit of volatility. If you would invest  138.00  in GUOTAI JUNAN SEC on December 21, 2024 and sell it today you would earn a total of  9.00  from holding GUOTAI JUNAN SEC or generate 6.52% return on investment over 90 days.

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

Genertec Universal Medical  vs.  GUOTAI JUNAN SEC

Genertec Universal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genertec Universal Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Genertec Universal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GUOTAI JUNAN SEC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GUOTAI JUNAN SEC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GUOTAI JUNAN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Genertec Universal and GUOTAI JUNAN

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

The idea behind Genertec Universal Medical and GUOTAI JUNAN SEC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.