Correlation Between Arm Holdings and GEN Restaurant

Can any of the company-specific risk be diversified away by investing in both Arm Holdings and GEN Restaurant 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 Arm Holdings and GEN Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arm Holdings plc and GEN Restaurant Group,, you can compare the effects of market volatilities on Arm Holdings and GEN Restaurant 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 Arm Holdings with a short position of GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and GEN Restaurant.

Diversification Opportunities for Arm Holdings and GEN Restaurant

0.31

Correlation Coefficient

Arm Holdings  GEN Restaurant

Weak diversification

The 3 months correlation between Arm and GEN is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, and Arm Holdings 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 Arm Holdings plc are associated (or correlated) with GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Arm Holdings i.e., Arm Holdings and GEN Restaurant go up and down completely randomly.

Pair Corralation between Arm Holdings and GEN Restaurant

Considering the 90-day investment horizon Arm Holdings plc is expected to under-perform the GEN Restaurant. In addition to that, Arm Holdings is 1.14 times more volatile than GEN Restaurant Group,. It trades about -0.02 of its total potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.02 per unit of volatility. If you would invest  867.00  in GEN Restaurant Group, on September 27, 2024 and sell it today you would lose (120.00) from holding GEN Restaurant Group, or give up 13.84% of portfolio value over 90 days.

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

Arm Holdings plc  vs.  GEN Restaurant Group,

Arm Holdings plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arm Holdings plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Arm Holdings and GEN Restaurant

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

The idea behind Arm Holdings plc and GEN Restaurant Group, 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.