Correlation Between Generation Capital and Amot Investments

Can any of the company-specific risk be diversified away by investing in both Generation Capital and Amot Investments 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 Generation Capital and Amot Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Generation Capital and Amot Investments, you can compare the effects of market volatilities on Generation Capital and Amot Investments 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 Generation Capital with a short position of Amot Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Capital and Amot Investments.

Diversification Opportunities for Generation Capital and Amot Investments

0.87

Correlation Coefficient

Generation Capital  Amot Investments

Very poor diversification

The 3 months correlation between Generation and Amot is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Generation Capital and Amot Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amot Investments and Generation Capital 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 Generation Capital are associated (or correlated) with Amot Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amot Investments has no effect on the direction of Generation Capital i.e., Generation Capital and Amot Investments go up and down completely randomly.

Pair Corralation between Generation Capital and Amot Investments

Assuming the 90 days trading horizon Generation Capital is expected to generate 1.07 times less return on investment than Amot Investments. In addition to that, Generation Capital is 1.37 times more volatile than Amot Investments. It trades about 0.22 of its total potential returns per unit of risk. Amot Investments is currently generating about 0.32 per unit of volatility. If you would invest  159,163  in Amot Investments on September 5, 2024 and sell it today you would earn a total of  44,937  from holding Amot Investments or generate 28.23% return on investment over 90 days.

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

Generation Capital  vs.  Amot Investments

Generation Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Generation Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Amot Investments

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amot Investments are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amot Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generation Capital and Amot Investments

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

The idea behind Generation Capital and Amot Investments 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.