Correlation Between AUTO TRADER and Genco Shipping

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

By analyzing existing cross correlation between AUTO TRADER ADR and Genco Shipping Trading, you can compare the effects of market volatilities on AUTO TRADER and Genco Shipping 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 AUTO TRADER with a short position of Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTO TRADER and Genco Shipping.

Diversification Opportunities for AUTO TRADER and Genco Shipping

-0.26

Correlation Coefficient

AUTO TRADER  Genco Shipping

Very good diversification

The 3 months correlation between AUTO and Genco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding AUTO TRADER ADR and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading and AUTO TRADER 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 AUTO TRADER ADR are associated (or correlated) with Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of AUTO TRADER i.e., AUTO TRADER and Genco Shipping go up and down completely randomly.

Pair Corralation between AUTO TRADER and Genco Shipping

Assuming the 90 days trading horizon AUTO TRADER ADR is expected to generate 0.81 times more return on investment than Genco Shipping. However, AUTO TRADER ADR is 1.23 times less risky than Genco Shipping. It trades about -0.01 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about -0.02 per unit of risk. If you would invest  250.00  in AUTO TRADER ADR on September 13, 2024 and sell it today you would lose (4.00) from holding AUTO TRADER ADR or give up 1.6% of portfolio value over 90 days.

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

AUTO TRADER ADR  vs.  Genco Shipping Trading

AUTO TRADER ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUTO TRADER ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AUTO TRADER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Genco Shipping Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genco Shipping is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AUTO TRADER and Genco Shipping

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

The idea behind AUTO TRADER ADR and Genco Shipping Trading 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.