Correlation Between EirGenix and GeneReach Biotechnology

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

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

Diversification Opportunities for EirGenix and GeneReach Biotechnology

0.66

Correlation Coefficient

EirGenix  GeneReach Biotechnology

Poor diversification

The 3 months correlation between EirGenix and GeneReach is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding EirGenix and GeneReach Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneReach Biotechnology and EirGenix 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 EirGenix are associated (or correlated) with GeneReach Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneReach Biotechnology has no effect on the direction of EirGenix i.e., EirGenix and GeneReach Biotechnology go up and down completely randomly.

Pair Corralation between EirGenix and GeneReach Biotechnology

Assuming the 90 days trading horizon EirGenix is expected to generate 1.27 times less return on investment than GeneReach Biotechnology. In addition to that, EirGenix is 1.22 times more volatile than GeneReach Biotechnology. It trades about 0.12 of its total potential returns per unit of risk. GeneReach Biotechnology is currently generating about 0.18 per unit of volatility. If you would invest  2,725  in GeneReach Biotechnology on October 13, 2024 and sell it today you would earn a total of  210.00  from holding GeneReach Biotechnology or generate 7.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

EirGenix  vs.  GeneReach Biotechnology

EirGenix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EirGenix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EirGenix is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GeneReach Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind EirGenix and GeneReach Biotechnology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.