Correlation Between GEN Restaurant and Brother Industries

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

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

Diversification Opportunities for GEN Restaurant and Brother Industries

-0.45

Correlation Coefficient

GEN Restaurant  Brother Industries

Very good diversification

The 3 months correlation between GEN and Brother is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Brother Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brother Industries and GEN Restaurant 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 GEN Restaurant Group, are associated (or correlated) with Brother Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brother Industries has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Brother Industries go up and down completely randomly.

Pair Corralation between GEN Restaurant and Brother Industries

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Brother Industries. In addition to that, GEN Restaurant is 1.98 times more volatile than Brother Industries Ltd. It trades about -0.08 of its total potential returns per unit of risk. Brother Industries Ltd is currently generating about 0.1 per unit of volatility. If you would invest  3,348  in Brother Industries Ltd on December 27, 2024 and sell it today you would earn a total of  437.00  from holding Brother Industries Ltd or generate 13.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GEN Restaurant Group,  vs.  Brother Industries Ltd

GEN Restaurant Group,

Risk-Adjusted Performance

Very Weak

Over the last 90 days GEN Restaurant Group, 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Brother Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brother Industries Ltd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Brother Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEN Restaurant and Brother Industries

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

The idea behind GEN Restaurant Group, and Brother Industries Ltd 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.