Correlation Between Avadel Pharmaceuticals and GEN Restaurant

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

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

Diversification Opportunities for Avadel Pharmaceuticals and GEN Restaurant

0.82

Correlation Coefficient

Avadel Pharmaceuticals  GEN Restaurant

Very poor diversification

The 3 months correlation between Avadel and GEN is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Avadel Pharmaceuticals 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 Avadel Pharmaceuticals 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 Avadel Pharmaceuticals 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 Avadel Pharmaceuticals i.e., Avadel Pharmaceuticals and GEN Restaurant go up and down completely randomly.

Pair Corralation between Avadel Pharmaceuticals and GEN Restaurant

Given the investment horizon of 90 days Avadel Pharmaceuticals PLC is expected to under-perform the GEN Restaurant. In addition to that, Avadel Pharmaceuticals is 3.65 times more volatile than GEN Restaurant Group,. It trades about -0.21 of its total potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.23 per unit of volatility. If you would invest  735.00  in GEN Restaurant Group, on October 26, 2024 and sell it today you would lose (55.00) from holding GEN Restaurant Group, or give up 7.48% of portfolio value over 90 days.

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

Avadel Pharmaceuticals PLC  vs.  GEN Restaurant Group,

Avadel Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avadel Pharmaceuticals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Avadel Pharmaceuticals and GEN Restaurant

The main advantage of trading using opposite Avadel Pharmaceuticals and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avadel Pharmaceuticals 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 Avadel Pharmaceuticals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.