Correlation Between Genesis Growth and Plum Acquisition

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

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

Diversification Opportunities for Genesis Growth and Plum Acquisition

-0.37

Correlation Coefficient

Genesis Growth  Plum Acquisition

Very good diversification

The 3 months correlation between Genesis and Plum is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Growth Tech and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp and Genesis Growth 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 Genesis Growth Tech are associated (or correlated) with Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of Genesis Growth i.e., Genesis Growth and Plum Acquisition go up and down completely randomly.

Pair Corralation between Genesis Growth and Plum Acquisition

If you would invest  5.52  in Plum Acquisition Corp on September 17, 2024 and sell it today you would earn a total of  14.48  from holding Plum Acquisition Corp or generate 262.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	3.23%
Values	Daily Returns

Genesis Growth Tech  vs.  Plum Acquisition Corp

Genesis Growth Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Growth Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genesis Growth is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Plum Acquisition Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plum Acquisition Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking indicators, Plum Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genesis Growth and Plum Acquisition

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

The idea behind Genesis Growth Tech and Plum Acquisition Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.