Correlation Between Geron and ChitogenX

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

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

Diversification Opportunities for Geron and ChitogenX

0.76

Correlation Coefficient

Geron  ChitogenX

Poor diversification

The 3 months correlation between Geron and ChitogenX is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Geron and ChitogenX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChitogenX and Geron 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 Geron are associated (or correlated) with ChitogenX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChitogenX has no effect on the direction of Geron i.e., Geron and ChitogenX go up and down completely randomly.

Pair Corralation between Geron and ChitogenX

Given the investment horizon of 90 days Geron is expected to generate 3.24 times more return on investment than ChitogenX. However, Geron is 3.24 times more volatile than ChitogenX. It trades about 0.02 of its potential returns per unit of risk. ChitogenX is currently generating about -0.12 per unit of risk. If you would invest  411.00  in Geron on September 2, 2024 and sell it today you would earn a total of  1.00  from holding Geron or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Geron  vs.  ChitogenX

Geron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Geron is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ChitogenX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChitogenX 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 nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Geron and ChitogenX

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

The idea behind Geron and ChitogenX 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 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.