Correlation Between GEN Restaurant and Proficient Auto

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

Diversification Opportunities for GEN Restaurant and Proficient Auto

0.04

Correlation Coefficient

GEN Restaurant  Proficient Auto

Significant diversification

The 3 months correlation between GEN and Proficient is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and Proficient Auto Logistics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proficient Auto Logi 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 Proficient Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proficient Auto Logi has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and Proficient Auto go up and down completely randomly.

Pair Corralation between GEN Restaurant and Proficient Auto

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Proficient Auto. But the stock apears to be less risky and, when comparing its historical volatility, GEN Restaurant Group, is 1.45 times less risky than Proficient Auto. The stock trades about -0.15 of its potential returns per unit of risk. The Proficient Auto Logistics, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  946.00  in Proficient Auto Logistics, on October 12, 2024 and sell it today you would earn a total of  24.00  from holding Proficient Auto Logistics, or generate 2.54% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  Proficient Auto Logistics,

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Proficient Auto Logi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proficient Auto Logistics, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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.

Pair Trading with GEN Restaurant and Proficient Auto

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

The idea behind GEN Restaurant Group, and Proficient Auto Logistics, 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.