Correlation Between Genovis AB and I Tech

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

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

Diversification Opportunities for Genovis AB and I Tech

-0.28

Correlation Coefficient

Genovis AB  I Tech

Very good diversification

The 3 months correlation between Genovis and ITECH is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Genovis AB and I Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Tech and Genovis AB 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 Genovis AB are associated (or correlated) with I Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Tech has no effect on the direction of Genovis AB i.e., Genovis AB and I Tech go up and down completely randomly.

Pair Corralation between Genovis AB and I Tech

Assuming the 90 days trading horizon Genovis AB is expected to generate 2.69 times more return on investment than I Tech. However, Genovis AB is 2.69 times more volatile than I Tech. It trades about 0.1 of its potential returns per unit of risk. I Tech is currently generating about 0.05 per unit of risk. If you would invest  2,190  in Genovis AB on September 5, 2024 and sell it today you would earn a total of  265.00  from holding Genovis AB or generate 12.1% return on investment over 90 days.

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

Genovis AB  vs.  I Tech

Genovis AB

Risk-Adjusted Performance

2 of 100

Weak

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

I Tech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in I Tech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, I Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Genovis AB and I Tech

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

The idea behind Genovis AB and I 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.