Correlation Between GEN Restaurant and Kingsway Financial

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

Diversification Opportunities for GEN Restaurant and Kingsway Financial

0.77

Correlation Coefficient

GEN Restaurant  Kingsway Financial

Poor diversification

The 3 months correlation between GEN and Kingsway is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial 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 Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Kingsway Financial go up and down completely randomly.

Pair Corralation between GEN Restaurant and Kingsway Financial

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Kingsway Financial. In addition to that, GEN Restaurant is 1.6 times more volatile than Kingsway Financial Services. It trades about -0.26 of its total potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.27 per unit of volatility. If you would invest  846.00  in Kingsway Financial Services on October 25, 2024 and sell it today you would lose (48.00) from holding Kingsway Financial Services or give up 5.67% of portfolio value over 90 days.

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

GEN Restaurant Group,  vs.  Kingsway Financial Services

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 uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kingsway Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingsway Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GEN Restaurant and Kingsway Financial

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

The idea behind GEN Restaurant Group, and Kingsway Financial Services 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.