Correlation Between GEN Restaurant and Olympic Steel

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

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

Diversification Opportunities for GEN Restaurant and Olympic Steel

0.24

Correlation Coefficient

GEN Restaurant  Olympic Steel

Modest diversification

The 3 months correlation between GEN and Olympic is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and GEN Restaurant 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 GEN Restaurant Group, are associated (or correlated) with Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Olympic Steel go up and down completely randomly.

Pair Corralation between GEN Restaurant and Olympic Steel

Given the investment horizon of 90 days GEN Restaurant Group, is expected to generate 1.58 times more return on investment than Olympic Steel. However, GEN Restaurant is 1.58 times more volatile than Olympic Steel. It trades about 0.02 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.07 per unit of risk. If you would invest  720.00  in GEN Restaurant Group, on September 28, 2024 and sell it today you would lose (6.00) from holding GEN Restaurant Group, or give up 0.83% of portfolio value over 90 days.

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

GEN Restaurant Group,  vs.  Olympic Steel

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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Olympic Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Olympic Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GEN Restaurant and Olympic Steel

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

The idea behind GEN Restaurant Group, and Olympic Steel 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.