Correlation Between Eastman Chemical and GEN Restaurant

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

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

Diversification Opportunities for Eastman Chemical and GEN Restaurant

0.13

Correlation Coefficient

Eastman Chemical  GEN Restaurant

Average diversification

The 3 months correlation between Eastman and GEN is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, and Eastman Chemical 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 Eastman Chemical are associated (or correlated) with GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and GEN Restaurant go up and down completely randomly.

Pair Corralation between Eastman Chemical and GEN Restaurant

Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the GEN Restaurant. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical is 2.25 times less risky than GEN Restaurant. The stock trades about -0.4 of its potential returns per unit of risk. The GEN Restaurant Group, is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  776.00  in GEN Restaurant Group, on September 22, 2024 and sell it today you would lose (23.00) from holding GEN Restaurant Group, or give up 2.96% of portfolio value over 90 days.

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

Eastman Chemical  vs.  GEN Restaurant Group,

Eastman Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eastman Chemical and GEN Restaurant

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

The idea behind Eastman Chemical and GEN Restaurant Group, 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .