Correlation Between Genomma Lab and American International
Can any of the company-specific risk be diversified away by investing in both Genomma Lab and American International 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 Genomma Lab and American International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genomma Lab Internacional and American International Group, you can compare the effects of market volatilities on Genomma Lab and American International 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 Genomma Lab with a short position of American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genomma Lab and American International.
Diversification Opportunities for Genomma Lab and American International
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Genomma and American is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Genomma Lab Internacional and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International and Genomma Lab 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 Genomma Lab Internacional are associated (or correlated) with American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of Genomma Lab i.e., Genomma Lab and American International go up and down completely randomly.
Pair Corralation between Genomma Lab and American International
Assuming the 90 days trading horizon Genomma Lab is expected to generate 5.26 times less return on investment than American International. But when comparing it to its historical volatility, Genomma Lab Internacional is 1.23 times less risky than American International. It trades about 0.03 of its potential returns per unit of risk. American International Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 143,332 in American International Group on September 26, 2024 and sell it today you would earn a total of 8,018 from holding American International Group or generate 5.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Genomma Lab Internacional vs. American International Group
Performance |
Timeline |
Genomma Lab Internacional |
American International |
Genomma Lab and American International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Genomma Lab and American International
The main advantage of trading using opposite Genomma Lab and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genomma Lab position performs unexpectedly, American International 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 American International will offset losses from the drop in American International's long position.Genomma Lab vs. Gruma SAB de | Genomma Lab vs. Alfa SAB de | Genomma Lab vs. Kimberly Clark de Mxico | Genomma Lab vs. Grupo Mxico SAB |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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