Correlation Between Genesis Land and European Residential

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

By analyzing existing cross correlation between Genesis Land Development and European Residential Real, you can compare the effects of market volatilities on Genesis Land and European Residential 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 Genesis Land with a short position of European Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesis Land and European Residential.

Diversification Opportunities for Genesis Land and European Residential

-0.01

Correlation Coefficient

Genesis Land  European Residential

Good diversification

The 3 months correlation between Genesis and European is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Land Development and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and Genesis Land 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 Genesis Land Development are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of Genesis Land i.e., Genesis Land and European Residential go up and down completely randomly.

Pair Corralation between Genesis Land and European Residential

Assuming the 90 days trading horizon Genesis Land Development is expected to generate 1.91 times more return on investment than European Residential. However, Genesis Land is 1.91 times more volatile than European Residential Real. It trades about 0.05 of its potential returns per unit of risk. European Residential Real is currently generating about 0.0 per unit of risk. If you would invest  200.00  in Genesis Land Development on October 8, 2024 and sell it today you would earn a total of  132.00  from holding Genesis Land Development or generate 66.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.56%
Values	Daily Returns

Genesis Land Development  vs.  European Residential Real

Genesis Land Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Land Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

European Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Residential Real 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 technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Genesis Land and European Residential

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

The idea behind Genesis Land Development and European Residential Real 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..