Correlation Between Adler Group and Generation Income

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

By analyzing existing cross correlation between Adler Group SA and Generation Income Properties, you can compare the effects of market volatilities on Adler Group and Generation Income 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 Adler Group with a short position of Generation Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adler Group and Generation Income.

Diversification Opportunities for Adler Group and Generation Income

-0.5

Correlation Coefficient

Adler Group  Generation Income

Very good diversification

The 3 months correlation between Adler and Generation is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Adler Group SA and Generation Income Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Income and Adler Group 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 Adler Group SA are associated (or correlated) with Generation Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Income has no effect on the direction of Adler Group i.e., Adler Group and Generation Income go up and down completely randomly.

Pair Corralation between Adler Group and Generation Income

Assuming the 90 days horizon Adler Group is expected to generate 456.19 times less return on investment than Generation Income. But when comparing it to its historical volatility, Adler Group SA is 126.11 times less risky than Generation Income. It trades about 0.09 of its potential returns per unit of risk. Generation Income Properties is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Generation Income Properties on September 14, 2024 and sell it today you would lose (10.00) from holding Generation Income Properties or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.6%
Values	Daily Returns

Adler Group SA  vs.  Generation Income Properties

Adler Group SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adler Group SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Adler Group reported solid returns over the last few months and may actually be approaching a breakup point.

Generation Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Income Properties are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Generation Income showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adler Group and Generation Income

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

The idea behind Adler Group SA and Generation Income Properties 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.