Correlation Between Genertec Universal and Kering SA

Can any of the company-specific risk be diversified away by investing in both Genertec Universal and Kering SA 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 Kering SA 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 Kering SA, you can compare the effects of market volatilities on Genertec Universal and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genertec Universal and Kering SA.

Diversification Opportunities for Genertec Universal and Kering SA

0.63

Correlation Coefficient

Genertec Universal  Kering SA

Poor diversification

The 3 months correlation between Genertec and Kering is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Genertec Universal Medical and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Genertec Universal i.e., Genertec Universal and Kering SA go up and down completely randomly.

Pair Corralation between Genertec Universal and Kering SA

Assuming the 90 days horizon Genertec Universal Medical is expected to generate 1.08 times more return on investment than Kering SA. However, Genertec Universal is 1.08 times more volatile than Kering SA. It trades about 0.04 of its potential returns per unit of risk. Kering SA is currently generating about -0.05 per unit of risk. If you would invest  57.00  in Genertec Universal Medical on December 21, 2024 and sell it today you would earn a total of  3.00  from holding Genertec Universal Medical or generate 5.26% return on investment over 90 days.

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

Genertec Universal Medical  vs.  Kering SA

Genertec Universal

Risk-Adjusted Performance

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 April 2025.

Kering SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kering SA 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 Genertec Universal and Kering SA

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

The idea behind Genertec Universal Medical and Kering SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.