Correlation Between AmeraMex International and Gencor Industries

Can any of the company-specific risk be diversified away by investing in both AmeraMex International and Gencor Industries 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 AmeraMex International and Gencor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AmeraMex International and Gencor Industries, you can compare the effects of market volatilities on AmeraMex International and Gencor Industries 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 AmeraMex International with a short position of Gencor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Gencor Industries.

Diversification Opportunities for AmeraMex International and Gencor Industries

0.52

Correlation Coefficient

AmeraMex International  Gencor Industries

Very weak diversification

The 3 months correlation between AmeraMex and Gencor is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries and AmeraMex International 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 AmeraMex International are associated (or correlated) with Gencor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencor Industries has no effect on the direction of AmeraMex International i.e., AmeraMex International and Gencor Industries go up and down completely randomly.

Pair Corralation between AmeraMex International and Gencor Industries

Given the investment horizon of 90 days AmeraMex International is expected to generate 1.35 times more return on investment than Gencor Industries. However, AmeraMex International is 1.35 times more volatile than Gencor Industries. It trades about 0.02 of its potential returns per unit of risk. Gencor Industries is currently generating about -0.15 per unit of risk. If you would invest  20.00  in AmeraMex International on December 28, 2024 and sell it today you would earn a total of  0.00  from holding AmeraMex International or generate 0.0% return on investment over 90 days.

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

AmeraMex International  vs.  Gencor Industries

AmeraMex International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmeraMex International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, AmeraMex International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gencor Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gencor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AmeraMex International and Gencor Industries

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

The idea behind AmeraMex International and Gencor Industries 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.