Correlation Between CubicFarm Systems and Gencor Industries

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

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

Diversification Opportunities for CubicFarm Systems and Gencor Industries

0.16

Correlation Coefficient

CubicFarm Systems  Gencor Industries

Average diversification

The 3 months correlation between CubicFarm and Gencor is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CubicFarm Systems Corp and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries and CubicFarm Systems 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 CubicFarm Systems Corp 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 CubicFarm Systems i.e., CubicFarm Systems and Gencor Industries go up and down completely randomly.

Pair Corralation between CubicFarm Systems and Gencor Industries

Assuming the 90 days horizon CubicFarm Systems Corp is expected to generate 94.52 times more return on investment than Gencor Industries. However, CubicFarm Systems is 94.52 times more volatile than Gencor Industries. It trades about 0.24 of its potential returns per unit of risk. Gencor Industries is currently generating about 0.07 per unit of risk. If you would invest  6.00  in CubicFarm Systems Corp on September 17, 2024 and sell it today you would earn a total of  1.00  from holding CubicFarm Systems Corp or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

CubicFarm Systems Corp  vs.  Gencor Industries

CubicFarm Systems Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CubicFarm Systems Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, CubicFarm Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Gencor Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gencor Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Gencor Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CubicFarm Systems and Gencor Industries

The main advantage of trading using opposite CubicFarm Systems and Gencor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubicFarm Systems 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 CubicFarm Systems Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.