Correlation Between Genscript Biotech and Applied Materials

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

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

Diversification Opportunities for Genscript Biotech and Applied Materials

0.66

Correlation Coefficient

Genscript Biotech  Applied Materials

Poor diversification

The 3 months correlation between Genscript and Applied is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Genscript Biotech and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Genscript Biotech 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 Genscript Biotech are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Genscript Biotech i.e., Genscript Biotech and Applied Materials go up and down completely randomly.

Pair Corralation between Genscript Biotech and Applied Materials

Assuming the 90 days horizon Genscript Biotech is expected to generate 1.56 times more return on investment than Applied Materials. However, Genscript Biotech is 1.56 times more volatile than Applied Materials. It trades about 0.18 of its potential returns per unit of risk. Applied Materials is currently generating about 0.22 per unit of risk. If you would invest  119.00  in Genscript Biotech on April 20, 2025 and sell it today you would earn a total of  62.00  from holding Genscript Biotech or generate 52.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Genscript Biotech  vs.  Applied Materials

Genscript Biotech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genscript Biotech are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Genscript Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

Applied Materials

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Applied Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genscript Biotech and Applied Materials

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

The idea behind Genscript Biotech and Applied Materials 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.