Correlation Between Genertec Universal and SFC Energy

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

By analyzing existing cross correlation between Genertec Universal Medical and SFC Energy AG, you can compare the effects of market volatilities on Genertec Universal and SFC Energy 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 Genertec Universal with a short position of SFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genertec Universal and SFC Energy.

Diversification Opportunities for Genertec Universal and SFC Energy

-0.28

Correlation Coefficient

Genertec Universal  SFC Energy

Very good diversification

The 3 months correlation between Genertec and SFC is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Genertec Universal Medical and SFC Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFC Energy AG and Genertec Universal 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 Genertec Universal Medical are associated (or correlated) with SFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFC Energy AG has no effect on the direction of Genertec Universal i.e., Genertec Universal and SFC Energy go up and down completely randomly.

Pair Corralation between Genertec Universal and SFC Energy

Assuming the 90 days horizon Genertec Universal Medical is expected to generate 1.68 times more return on investment than SFC Energy. However, Genertec Universal is 1.68 times more volatile than SFC Energy AG. It trades about 0.05 of its potential returns per unit of risk. SFC Energy AG is currently generating about -0.07 per unit of risk. If you would invest  56.00  in Genertec Universal Medical on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Genertec Universal Medical or generate 1.79% return on investment over 90 days.

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

Genertec Universal Medical  vs.  SFC Energy AG

Genertec Universal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genertec Universal Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Genertec Universal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SFC Energy AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Genertec Universal and SFC Energy

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

The idea behind Genertec Universal Medical and SFC Energy AG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.