Correlation Between Four Seasons and Genius

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

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

Diversification Opportunities for Four Seasons and Genius

0.48

Correlation Coefficient

Four Seasons  Genius

Very weak diversification

The 3 months correlation between Four and Genius is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and Genius Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Group and Four Seasons 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 Four Seasons Education are associated (or correlated) with Genius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Group has no effect on the direction of Four Seasons i.e., Four Seasons and Genius go up and down completely randomly.

Pair Corralation between Four Seasons and Genius

Given the investment horizon of 90 days Four Seasons Education is expected to generate 1.06 times more return on investment than Genius. However, Four Seasons is 1.06 times more volatile than Genius Group. It trades about 0.04 of its potential returns per unit of risk. Genius Group is currently generating about -0.05 per unit of risk. If you would invest  1,050  in Four Seasons Education on February 24, 2024 and sell it today you would earn a total of  30.00  from holding Four Seasons Education or generate 2.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	79.55%
Values	Daily Returns

Four Seasons Education  vs.  Genius Group

Four Seasons Education

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Seasons Education are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Four Seasons unveiled solid returns over the last few months and may actually be approaching a breakup point.

Genius Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genius Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Genius unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Four Seasons and Genius

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

The idea behind Four Seasons Education and Genius Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.