Correlation Between Gentex and C PARAN

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

By analyzing existing cross correlation between Gentex and C PARAN EN, you can compare the effects of market volatilities on Gentex and C PARAN 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 C PARAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and C PARAN.

Diversification Opportunities for Gentex and C PARAN

-0.77

Correlation Coefficient

Gentex  C PARAN

Pay attention - limited upside

The 3 months correlation between Gentex and ELP1 is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and C PARAN EN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C PARAN EN 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 C PARAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C PARAN EN has no effect on the direction of Gentex i.e., Gentex and C PARAN go up and down completely randomly.

Pair Corralation between Gentex and C PARAN

Assuming the 90 days horizon Gentex is expected to generate 0.48 times more return on investment than C PARAN. However, Gentex is 2.09 times less risky than C PARAN. It trades about -0.04 of its potential returns per unit of risk. C PARAN EN is currently generating about -0.05 per unit of risk. If you would invest  2,840  in Gentex on September 23, 2024 and sell it today you would lose (40.00) from holding Gentex or give up 1.41% of portfolio value over 90 days.

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

Gentex  vs.  C PARAN EN

Gentex

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gentex is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

C PARAN EN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C PARAN EN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gentex and C PARAN

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

The idea behind Gentex and C PARAN EN 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.