Correlation Between AUST AGRICULTURAL and Gentex

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

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

Diversification Opportunities for AUST AGRICULTURAL and Gentex

0.26

Correlation Coefficient

AUST AGRICULTURAL  Gentex

Modest diversification

The 3 months correlation between AUST and Gentex is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and AUST AGRICULTURAL 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 AUST AGRICULTURAL are associated (or correlated) with Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and Gentex go up and down completely randomly.

Pair Corralation between AUST AGRICULTURAL and Gentex

Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to generate 1.14 times more return on investment than Gentex. However, AUST AGRICULTURAL is 1.14 times more volatile than Gentex. It trades about -0.02 of its potential returns per unit of risk. Gentex is currently generating about -0.04 per unit of risk. If you would invest  87.00  in AUST AGRICULTURAL on October 24, 2024 and sell it today you would lose (7.00) from holding AUST AGRICULTURAL or give up 8.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

AUST AGRICULTURAL  vs.  Gentex

AUST AGRICULTURAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUST AGRICULTURAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Gentex

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AUST AGRICULTURAL and Gentex

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

The idea behind AUST AGRICULTURAL and Gentex 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.