Correlation Between GainClients and Genesis Electronics

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

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

Diversification Opportunities for GainClients and Genesis Electronics

1.0

Correlation Coefficient

GainClients  Genesis Electronics

No risk reduction

The 3 months correlation between GainClients and Genesis is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding GainClients and Genesis Electronics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Electronics and GainClients 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 GainClients are associated (or correlated) with Genesis Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Electronics has no effect on the direction of GainClients i.e., GainClients and Genesis Electronics go up and down completely randomly.

Pair Corralation between GainClients and Genesis Electronics

Given the investment horizon of 90 days GainClients is expected to generate 6.13 times more return on investment than Genesis Electronics. However, GainClients is 6.13 times more volatile than Genesis Electronics Group. It trades about 0.06 of its potential returns per unit of risk. Genesis Electronics Group is currently generating about -0.03 per unit of risk. If you would invest  0.23  in GainClients on September 27, 2024 and sell it today you would lose (0.22) from holding GainClients or give up 95.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.6%
Values	Daily Returns

GainClients  vs.  Genesis Electronics Group

GainClients

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GainClients has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, GainClients is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Genesis Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Electronics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Genesis Electronics is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GainClients and Genesis Electronics

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

The idea behind GainClients and Genesis Electronics Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.