Correlation Between Central Puerto and Genie Energy

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

By analyzing existing cross correlation between Central Puerto SA and Genie Energy, you can compare the effects of market volatilities on Central Puerto and Genie Energy 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 Central Puerto with a short position of Genie Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Genie Energy.

Diversification Opportunities for Central Puerto and Genie Energy

-0.5

Correlation Coefficient

Central Puerto  Genie Energy

Very good diversification

The 3 months correlation between Central and Genie is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Genie Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Energy and Central Puerto 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 Central Puerto SA are associated (or correlated) with Genie Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Energy has no effect on the direction of Central Puerto i.e., Central Puerto and Genie Energy go up and down completely randomly.

Pair Corralation between Central Puerto and Genie Energy

Given the investment horizon of 90 days Central Puerto SA is expected to generate 1.18 times more return on investment than Genie Energy. However, Central Puerto is 1.18 times more volatile than Genie Energy. It trades about 0.29 of its potential returns per unit of risk. Genie Energy is currently generating about -0.05 per unit of risk. If you would invest  914.00  in Central Puerto SA on August 30, 2024 and sell it today you would earn a total of  463.00  from holding Central Puerto SA or generate 50.66% return on investment over 90 days.

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

Central Puerto SA  vs.  Genie Energy

Central Puerto SA

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Central Puerto SA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Central Puerto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Genie Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genie Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Genie Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Central Puerto and Genie Energy

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

The idea behind Central Puerto SA and Genie Energy 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.