Correlation Between Berkeley Energia and Genertec Universal

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

By analyzing existing cross correlation between Berkeley Energia Limited and Genertec Universal Medical, you can compare the effects of market volatilities on Berkeley Energia and Genertec Universal 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 Berkeley Energia with a short position of Genertec Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkeley Energia and Genertec Universal.

Diversification Opportunities for Berkeley Energia and Genertec Universal

-0.47

Correlation Coefficient

Berkeley Energia  Genertec Universal

Very good diversification

The 3 months correlation between Berkeley and Genertec is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Berkeley Energia Limited and Genertec Universal Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genertec Universal and Berkeley Energia 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 Berkeley Energia Limited are associated (or correlated) with Genertec Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genertec Universal has no effect on the direction of Berkeley Energia i.e., Berkeley Energia and Genertec Universal go up and down completely randomly.

Pair Corralation between Berkeley Energia and Genertec Universal

Assuming the 90 days horizon Berkeley Energia Limited is expected to under-perform the Genertec Universal. In addition to that, Berkeley Energia is 1.57 times more volatile than Genertec Universal Medical. It trades about -0.07 of its total potential returns per unit of risk. Genertec Universal Medical is currently generating about 0.08 per unit of volatility. If you would invest  53.00  in Genertec Universal Medical on October 6, 2024 and sell it today you would earn a total of  4.00  from holding Genertec Universal Medical or generate 7.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Berkeley Energia Limited  vs.  Genertec Universal Medical

Berkeley Energia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Genertec Universal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Berkeley Energia and Genertec Universal

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

The idea behind Berkeley Energia Limited and Genertec Universal Medical 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.