Correlation Between Eugene Technology and Global Standard

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

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

Diversification Opportunities for Eugene Technology and Global Standard

0.55

Correlation Coefficient

Eugene Technology  Global Standard

Very weak diversification

The 3 months correlation between Eugene and Global is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd and Global Standard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Standard Tech and Eugene 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 Eugene Technology CoLtd are associated (or correlated) with Global Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Standard Tech has no effect on the direction of Eugene Technology i.e., Eugene Technology and Global Standard go up and down completely randomly.

Pair Corralation between Eugene Technology and Global Standard

Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to under-perform the Global Standard. But the stock apears to be less risky and, when comparing its historical volatility, Eugene Technology CoLtd is 1.16 times less risky than Global Standard. The stock trades about -0.06 of its potential returns per unit of risk. The Global Standard Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,516,000  in Global Standard Technology on September 12, 2024 and sell it today you would earn a total of  16,000  from holding Global Standard Technology or generate 1.06% return on investment over 90 days.

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

Eugene Technology CoLtd  vs.  Global Standard Technology

Eugene Technology CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eugene Technology CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Global Standard Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Standard Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Standard is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eugene Technology and Global Standard

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

The idea behind Eugene Technology CoLtd and Global Standard 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 Transaction History module to view history of all your transactions and understand their impact on performance.