Correlation Between Gencor Industries and Schmitt Industries

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

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

Diversification Opportunities for Gencor Industries and Schmitt Industries

-0.38

Correlation Coefficient

Gencor Industries  Schmitt Industries

Very good diversification

The 3 months correlation between Gencor and Schmitt is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gencor Industries and Schmitt Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schmitt Industries and Gencor Industries 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 Gencor Industries are associated (or correlated) with Schmitt Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schmitt Industries has no effect on the direction of Gencor Industries i.e., Gencor Industries and Schmitt Industries go up and down completely randomly.

Pair Corralation between Gencor Industries and Schmitt Industries

If you would invest  1,976  in Gencor Industries on September 14, 2024 and sell it today you would earn a total of  168.00  from holding Gencor Industries or generate 8.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Gencor Industries  vs.  Schmitt Industries

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 fragile basic indicators, Gencor Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Schmitt Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schmitt Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Schmitt Industries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gencor Industries and Schmitt Industries

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

The idea behind Gencor Industries and Schmitt 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.