Correlation Between Blue World and Genesis Growth

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

By analyzing existing cross correlation between Blue World Acquisition and Genesis Growth Tech, you can compare the effects of market volatilities on Blue World and Genesis Growth 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 Blue World with a short position of Genesis Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue World and Genesis Growth.

Diversification Opportunities for Blue World and Genesis Growth

-0.85

Correlation Coefficient

Blue World  Genesis Growth

Pay attention - limited upside

The 3 months correlation between Blue and Genesis is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Blue World Acquisition and Genesis Growth Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Growth Tech and Blue World 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 Blue World Acquisition are associated (or correlated) with Genesis Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Growth Tech has no effect on the direction of Blue World i.e., Blue World and Genesis Growth go up and down completely randomly.

Pair Corralation between Blue World and Genesis Growth

Given the investment horizon of 90 days Blue World Acquisition is expected to under-perform the Genesis Growth. But the stock apears to be less risky and, when comparing its historical volatility, Blue World Acquisition is 2.85 times less risky than Genesis Growth. The stock trades about -0.03 of its potential returns per unit of risk. The Genesis Growth Tech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,043  in Genesis Growth Tech on September 26, 2024 and sell it today you would earn a total of  1,457  from holding Genesis Growth Tech or generate 139.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	36.05%
Values	Daily Returns

Blue World Acquisition  vs.  Genesis Growth Tech

Blue World Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue World Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Blue World is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Genesis Growth Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Growth Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Genesis Growth is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Blue World and Genesis Growth

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

The idea behind Blue World Acquisition and Genesis Growth Tech 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.