Correlation Between Genetec Technology and Kobay Tech

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

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

Diversification Opportunities for Genetec Technology and Kobay Tech

0.57

Correlation Coefficient

Genetec Technology  Kobay Tech

Very weak diversification

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

Pair Corralation between Genetec Technology and Kobay Tech

Assuming the 90 days trading horizon Genetec Technology Bhd is expected to generate 2.21 times more return on investment than Kobay Tech. However, Genetec Technology is 2.21 times more volatile than Kobay Tech Bhd. It trades about 0.13 of its potential returns per unit of risk. Kobay Tech Bhd is currently generating about 0.03 per unit of risk. If you would invest  80.00  in Genetec Technology Bhd on September 16, 2024 and sell it today you would earn a total of  45.00  from holding Genetec Technology Bhd or generate 56.25% return on investment over 90 days.

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

Genetec Technology Bhd  vs.  Kobay Tech Bhd

Genetec Technology Bhd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genetec Technology Bhd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Genetec Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kobay Tech Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kobay Tech Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kobay Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Genetec Technology and Kobay Tech

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

The idea behind Genetec Technology Bhd and Kobay Tech Bhd 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.