Correlation Between Zinwell and GeneFerm Biotechnology

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

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

Diversification Opportunities for Zinwell and GeneFerm Biotechnology

0.8

Correlation Coefficient

Zinwell  GeneFerm Biotechnology

Very poor diversification

The 3 months correlation between Zinwell and GeneFerm is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Zinwell and GeneFerm Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneFerm Biotechnology and Zinwell 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 Zinwell are associated (or correlated) with GeneFerm Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneFerm Biotechnology has no effect on the direction of Zinwell i.e., Zinwell and GeneFerm Biotechnology go up and down completely randomly.

Pair Corralation between Zinwell and GeneFerm Biotechnology

Assuming the 90 days trading horizon Zinwell is expected to generate 0.66 times more return on investment than GeneFerm Biotechnology. However, Zinwell is 1.52 times less risky than GeneFerm Biotechnology. It trades about 0.08 of its potential returns per unit of risk. GeneFerm Biotechnology Co is currently generating about 0.03 per unit of risk. If you would invest  2,070  in Zinwell on April 7, 2024 and sell it today you would earn a total of  150.00  from holding Zinwell or generate 7.25% return on investment over 90 days.

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

Zinwell  vs.  GeneFerm Biotechnology Co

Zinwell

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zinwell are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zinwell may actually be approaching a critical reversion point that can send shares even higher in August 2024.

GeneFerm Biotechnology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GeneFerm Biotechnology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, GeneFerm Biotechnology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Zinwell and GeneFerm Biotechnology

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

The idea behind Zinwell and GeneFerm Biotechnology Co 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.