Correlation Between Shin Kong and Genesis Technology

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

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

Diversification Opportunities for Shin Kong and Genesis Technology

-0.76

Correlation Coefficient

Shin Kong  Genesis Technology

Pay attention - limited upside

The 3 months correlation between Shin and Genesis is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology and Shin Kong 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 Shin Kong Financial are associated (or correlated) with Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of Shin Kong i.e., Shin Kong and Genesis Technology go up and down completely randomly.

Pair Corralation between Shin Kong and Genesis Technology

Assuming the 90 days trading horizon Shin Kong is expected to generate 7.22 times less return on investment than Genesis Technology. But when comparing it to its historical volatility, Shin Kong Financial is 1.41 times less risky than Genesis Technology. It trades about 0.07 of its potential returns per unit of risk. Genesis Technology is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  7,620  in Genesis Technology on January 24, 2024 and sell it today you would earn a total of  560.00  from holding Genesis Technology or generate 7.35% return on investment over 90 days.

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

Shin Kong Financial  vs.  Genesis Technology

Shin Kong Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shin Kong Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Genesis Technology

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Technology are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Genesis Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shin Kong and Genesis Technology

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

The idea behind Shin Kong Financial and Genesis Technology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.