Correlation Between Risuntek and Genus Power

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

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

Diversification Opportunities for Risuntek and Genus Power

0.37

Correlation Coefficient

Risuntek  Genus Power

Weak diversification

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

Pair Corralation between Risuntek and Genus Power

Assuming the 90 days trading horizon Risuntek is expected to generate 1.5 times more return on investment than Genus Power. However, Risuntek is 1.5 times more volatile than Genus Power Infrastructures. It trades about 0.04 of its potential returns per unit of risk. Genus Power Infrastructures is currently generating about -0.11 per unit of risk. If you would invest  2,528  in Risuntek on September 23, 2024 and sell it today you would earn a total of  41.00  from holding Risuntek or generate 1.62% return on investment over 90 days.

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

Risuntek  vs.  Genus Power Infrastructures

Risuntek

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Risuntek are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Risuntek sustained solid returns over the last few months and may actually be approaching a breakup point.

Genus Power Infrastr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genus Power Infrastructures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Genus Power is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Risuntek and Genus Power

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

The idea behind Risuntek and Genus Power Infrastructures 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.