Correlation Between Electrocore LLC and Genetic Technologies

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

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

Diversification Opportunities for Electrocore LLC and Genetic Technologies

-0.39

Correlation Coefficient

Electrocore LLC  Genetic Technologies

Very good diversification

The 3 months correlation between Electrocore and Genetic is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Electrocore LLC and Genetic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetic Technologies and Electrocore LLC 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 Electrocore LLC are associated (or correlated) with Genetic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetic Technologies has no effect on the direction of Electrocore LLC i.e., Electrocore LLC and Genetic Technologies go up and down completely randomly.

Pair Corralation between Electrocore LLC and Genetic Technologies

Given the investment horizon of 90 days Electrocore LLC is expected to generate 4.03 times more return on investment than Genetic Technologies. However, Electrocore LLC is 4.03 times more volatile than Genetic Technologies. It trades about 0.26 of its potential returns per unit of risk. Genetic Technologies is currently generating about -0.07 per unit of risk. If you would invest  585.00  in Electrocore LLC on September 12, 2024 and sell it today you would earn a total of  741.00  from holding Electrocore LLC or generate 126.67% return on investment over 90 days.

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

Electrocore LLC  vs.  Genetic Technologies

Electrocore LLC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electrocore LLC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Electrocore LLC reported solid returns over the last few months and may actually be approaching a breakup point.

Genetic Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genetic Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Genetic Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Electrocore LLC and Genetic Technologies

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

The idea behind Electrocore LLC and Genetic Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.