Correlation Between Mr D and Genetec Technology

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

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

Diversification Opportunities for Mr D and Genetec Technology

-0.79

Correlation Coefficient

Mr D  Genetec Technology

Pay attention - limited upside

The 3 months correlation between 5296 and Genetec is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mr D I and Genetec Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetec Technology Bhd and Mr D 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 Mr D I are associated (or correlated) with Genetec Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetec Technology Bhd has no effect on the direction of Mr D i.e., Mr D and Genetec Technology go up and down completely randomly.

Pair Corralation between Mr D and Genetec Technology

Assuming the 90 days trading horizon Mr D I is expected to under-perform the Genetec Technology. But the stock apears to be less risky and, when comparing its historical volatility, Mr D I is 3.3 times less risky than Genetec Technology. The stock trades about -0.19 of its potential returns per unit of risk. The Genetec Technology Bhd is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Genetec Technology Bhd on September 26, 2024 and sell it today you would earn a total of  58.00  from holding Genetec Technology Bhd or generate 80.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Mr D I  vs.  Genetec Technology Bhd

Mr D I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mr D I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Genetec Technology Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genetec Technology Bhd are ranked lower than 6 (%) 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.

Pair Trading with Mr D and Genetec Technology

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

The idea behind Mr D I and Genetec Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.