Correlation Between GEN Restaurant and Summit Hotel

Can any of the company-specific risk be diversified away by investing in both GEN Restaurant and Summit Hotel 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 Summit Hotel 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 Summit Hotel Properties, you can compare the effects of market volatilities on GEN Restaurant and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and Summit Hotel.

Diversification Opportunities for GEN Restaurant and Summit Hotel

-0.34

Correlation Coefficient

GEN Restaurant  Summit Hotel

Very good diversification

The 3 months correlation between GEN and Summit is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Summit Hotel go up and down completely randomly.

Pair Corralation between GEN Restaurant and Summit Hotel

Given the investment horizon of 90 days GEN Restaurant is expected to generate 7.22 times less return on investment than Summit Hotel. In addition to that, GEN Restaurant is 1.76 times more volatile than Summit Hotel Properties. It trades about 0.0 of its total potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.05 per unit of volatility. If you would invest  647.00  in Summit Hotel Properties on September 18, 2024 and sell it today you would earn a total of  38.00  from holding Summit Hotel Properties or generate 5.87% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  Summit Hotel Properties

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

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 quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Summit Hotel Properties

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Summit Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GEN Restaurant and Summit Hotel

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

The idea behind GEN Restaurant Group, and Summit Hotel Properties 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.