Correlation Between Gensource Potash and A-Cap Energy

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

By analyzing existing cross correlation between Gensource Potash and A Cap Energy Limited, you can compare the effects of market volatilities on Gensource Potash and A-Cap 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 Gensource Potash with a short position of A-Cap Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gensource Potash and A-Cap Energy.

Diversification Opportunities for Gensource Potash and A-Cap Energy

-0.38

Correlation Coefficient

Gensource Potash  A-Cap Energy

Very good diversification

The 3 months correlation between Gensource and A-Cap is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gensource Potash and A Cap Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Cap Energy and Gensource Potash 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 Gensource Potash are associated (or correlated) with A-Cap Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Cap Energy has no effect on the direction of Gensource Potash i.e., Gensource Potash and A-Cap Energy go up and down completely randomly.

Pair Corralation between Gensource Potash and A-Cap Energy

If you would invest  8.00  in Gensource Potash on September 4, 2024 and sell it today you would lose (2.00) from holding Gensource Potash or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Gensource Potash  vs.  A Cap Energy Limited

Gensource Potash

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gensource Potash are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Gensource Potash reported solid returns over the last few months and may actually be approaching a breakup point.

A Cap Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A Cap Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, A-Cap Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gensource Potash and A-Cap Energy

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

The idea behind Gensource Potash and A Cap Energy Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.