Correlation Between Retailors and Gencell

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

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

Diversification Opportunities for Retailors and Gencell

0.38

Correlation Coefficient

Retailors  Gencell

Weak diversification

The 3 months correlation between Retailors and Gencell is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Retailors and Gencell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencell and Retailors 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 Retailors 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 Retailors i.e., Retailors and Gencell go up and down completely randomly.

Pair Corralation between Retailors and Gencell

Assuming the 90 days trading horizon Retailors is expected to generate 1.06 times less return on investment than Gencell. But when comparing it to its historical volatility, Retailors is 2.06 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 of returns per unit of risk over similar time horizon. If you would invest  5,230  in Gencell on October 20, 2024 and sell it today you would earn a total of  540.00  from holding Gencell or generate 10.33% return on investment over 90 days.

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

Retailors  vs.  Gencell

Retailors

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Retailors are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Retailors 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 Retailors and Gencell

The main advantage of trading using opposite Retailors and Gencell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retailors 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 Retailors 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.