Correlation Between Iargento and Gencell

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

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

Diversification Opportunities for Iargento and Gencell

0.57

Correlation Coefficient

Iargento  Gencell

Very weak diversification

The 3 months correlation between Iargento and Gencell is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Iargento Hi Tech and Gencell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencell and Iargento 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 Iargento Hi Tech are associated (or correlated) with Gencell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencell has no effect on the direction of Iargento i.e., Iargento and Gencell go up and down completely randomly.

Pair Corralation between Iargento and Gencell

Assuming the 90 days trading horizon Iargento Hi Tech is expected to generate 0.85 times more return on investment than Gencell. However, Iargento Hi Tech is 1.18 times less risky than Gencell. It trades about 0.12 of its potential returns per unit of risk. Gencell is currently generating about 0.06 per unit of risk. If you would invest  7,660  in Iargento Hi Tech on October 20, 2024 and sell it today you would earn a total of  1,730  from holding Iargento Hi Tech or generate 22.58% return on investment over 90 days.

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

Iargento Hi Tech  vs.  Gencell

Iargento Hi Tech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iargento Hi Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iargento sustained solid returns over the last few months and may actually be approaching a breakup point.

Gencell

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gencell are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gencell sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iargento and Gencell

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

The idea behind Iargento Hi Tech and Gencell 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.