Correlation Between Gentex and SOCGEN

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

By analyzing existing cross correlation between Gentex and SOCGEN 8, you can compare the effects of market volatilities on Gentex and SOCGEN 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 Gentex with a short position of SOCGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and SOCGEN.

Diversification Opportunities for Gentex and SOCGEN

0.06

Correlation Coefficient

Gentex  SOCGEN

Significant diversification

The 3 months correlation between Gentex and SOCGEN is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and SOCGEN 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCGEN 8 and Gentex 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 Gentex are associated (or correlated) with SOCGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCGEN 8 has no effect on the direction of Gentex i.e., Gentex and SOCGEN go up and down completely randomly.

Pair Corralation between Gentex and SOCGEN

Given the investment horizon of 90 days Gentex is expected to generate 0.44 times more return on investment than SOCGEN. However, Gentex is 2.28 times less risky than SOCGEN. It trades about 0.05 of its potential returns per unit of risk. SOCGEN 8 is currently generating about -0.23 per unit of risk. If you would invest  2,917  in Gentex on September 18, 2024 and sell it today you would earn a total of  116.00  from holding Gentex or generate 3.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	28.57%
Values	Daily Returns

Gentex  vs.  SOCGEN 8

Gentex

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gentex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SOCGEN 8

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOCGEN 8 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for SOCGEN 8 investors.

Pair Trading with Gentex and SOCGEN

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

The idea behind Gentex and SOCGEN 8 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 .