Correlation Between Magni Tech and Genetec Technology

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

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

Diversification Opportunities for Magni Tech and Genetec Technology

0.61

Correlation Coefficient

Magni Tech  Genetec Technology

Poor diversification

The 3 months correlation between Magni and Genetec is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Magni Tech Industries and Genetec Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetec Technology Bhd and Magni Tech 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 Magni Tech Industries are associated (or correlated) with Genetec Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetec Technology Bhd has no effect on the direction of Magni Tech i.e., Magni Tech and Genetec Technology go up and down completely randomly.

Pair Corralation between Magni Tech and Genetec Technology

Assuming the 90 days trading horizon Magni Tech Industries is expected to under-perform the Genetec Technology. But the stock apears to be less risky and, when comparing its historical volatility, Magni Tech Industries is 1.16 times less risky than Genetec Technology. The stock trades about -0.16 of its potential returns per unit of risk. The Genetec Technology Bhd is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  115.00  in Genetec Technology Bhd on October 6, 2024 and sell it today you would earn a total of  32.00  from holding Genetec Technology Bhd or generate 27.83% return on investment over 90 days.

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

Magni Tech Industries  vs.  Genetec Technology Bhd

Magni Tech Industries

Risk-Adjusted Performance

4 of 100

Insignificant

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

Genetec Technology Bhd

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genetec Technology Bhd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Genetec Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magni Tech and Genetec Technology

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

The idea behind Magni Tech Industries and Genetec Technology Bhd 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.