Correlation Between Evolent Health and Genertec Universal

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

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

Diversification Opportunities for Evolent Health and Genertec Universal

-0.58

Correlation Coefficient

Evolent Health  Genertec Universal

Excellent diversification

The 3 months correlation between Evolent and Genertec is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Genertec Universal Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genertec Universal and Evolent Health 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 Evolent Health are associated (or correlated) with Genertec Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genertec Universal has no effect on the direction of Evolent Health i.e., Evolent Health and Genertec Universal go up and down completely randomly.

Pair Corralation between Evolent Health and Genertec Universal

Assuming the 90 days horizon Evolent Health is expected to under-perform the Genertec Universal. In addition to that, Evolent Health is 2.74 times more volatile than Genertec Universal Medical. It trades about -0.15 of its total potential returns per unit of risk. Genertec Universal Medical is currently generating about 0.07 per unit of volatility. If you would invest  53.00  in Genertec Universal Medical on October 22, 2024 and sell it today you would earn a total of  5.00  from holding Genertec Universal Medical or generate 9.43% return on investment over 90 days.

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

Evolent Health  vs.  Genertec Universal Medical

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Genertec Universal

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genertec Universal Medical are ranked lower than 5 (%) 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.

Pair Trading with Evolent Health and Genertec Universal

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

The idea behind Evolent Health and Genertec Universal Medical 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.