Correlation Between GenMont Biotech and SCI Pharmtech

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

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

Diversification Opportunities for GenMont Biotech and SCI Pharmtech

-0.63

Correlation Coefficient

GenMont Biotech  SCI Pharmtech

Excellent diversification

The 3 months correlation between GenMont and SCI is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GenMont Biotech and SCI Pharmtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Pharmtech and GenMont Biotech 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 GenMont Biotech are associated (or correlated) with SCI Pharmtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Pharmtech has no effect on the direction of GenMont Biotech i.e., GenMont Biotech and SCI Pharmtech go up and down completely randomly.

Pair Corralation between GenMont Biotech and SCI Pharmtech

Assuming the 90 days trading horizon GenMont Biotech is expected to generate 0.61 times more return on investment than SCI Pharmtech. However, GenMont Biotech is 1.65 times less risky than SCI Pharmtech. It trades about -0.26 of its potential returns per unit of risk. SCI Pharmtech is currently generating about -0.32 per unit of risk. If you would invest  2,030  in GenMont Biotech on September 24, 2024 and sell it today you would lose (80.00) from holding GenMont Biotech or give up 3.94% of portfolio value over 90 days.

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

GenMont Biotech  vs.  SCI Pharmtech

GenMont Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GenMont Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

SCI Pharmtech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SCI Pharmtech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, SCI Pharmtech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GenMont Biotech and SCI Pharmtech

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

The idea behind GenMont Biotech and SCI Pharmtech 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.