Correlation Between Genasys and Electro Sensors

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

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

Diversification Opportunities for Genasys and Electro Sensors

0.38

Correlation Coefficient

Genasys  Electro Sensors

Weak diversification

The 3 months correlation between Genasys and Electro is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Genasys and Electro Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Sensors and Genasys 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 Genasys are associated (or correlated) with Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Sensors has no effect on the direction of Genasys i.e., Genasys and Electro Sensors go up and down completely randomly.

Pair Corralation between Genasys and Electro Sensors

Given the investment horizon of 90 days Genasys is expected to generate 1.11 times more return on investment than Electro Sensors. However, Genasys is 1.11 times more volatile than Electro Sensors. It trades about 0.17 of its potential returns per unit of risk. Electro Sensors is currently generating about 0.1 per unit of risk. If you would invest  295.00  in Genasys on September 4, 2024 and sell it today you would earn a total of  82.00  from holding Genasys or generate 27.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Genasys  vs.  Electro Sensors

Genasys

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genasys are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Genasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Electro Sensors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electro Sensors are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Electro Sensors exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genasys and Electro Sensors

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

The idea behind Genasys and Electro Sensors 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.