Correlation Between Warner Music and Genscript Biotech

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

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

Diversification Opportunities for Warner Music and Genscript Biotech

-0.25

Correlation Coefficient

Warner Music  Genscript Biotech

Very good diversification

The 3 months correlation between Warner and Genscript is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Genscript Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genscript Biotech and Warner Music 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 Warner Music Group are associated (or correlated) with Genscript Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genscript Biotech has no effect on the direction of Warner Music i.e., Warner Music and Genscript Biotech go up and down completely randomly.

Pair Corralation between Warner Music and Genscript Biotech

Assuming the 90 days horizon Warner Music is expected to generate 3.82 times less return on investment than Genscript Biotech. But when comparing it to its historical volatility, Warner Music Group is 2.03 times less risky than Genscript Biotech. It trades about 0.1 of its potential returns per unit of risk. Genscript Biotech is currently generating about 0.18 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Warner Music Group  vs.  Genscript Biotech

Warner Music Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Music Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Warner Music may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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.

Pair Trading with Warner Music and Genscript Biotech

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

The idea behind Warner Music Group and Genscript Biotech 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.