Correlation Between GEN Restaurant and 00108WAK6

Can any of the company-specific risk be diversified away by investing in both GEN Restaurant and 00108WAK6 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 00108WAK6 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 AEP Texas 345, you can compare the effects of market volatilities on GEN Restaurant and 00108WAK6 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 00108WAK6. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and 00108WAK6.

Diversification Opportunities for GEN Restaurant and 00108WAK6

0.24

Correlation Coefficient

GEN Restaurant  00108WAK6

Modest diversification

The 3 months correlation between GEN and 00108WAK6 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and AEP Texas 345 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP Texas 345 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 00108WAK6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP Texas 345 has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and 00108WAK6 go up and down completely randomly.

Pair Corralation between GEN Restaurant and 00108WAK6

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the 00108WAK6. In addition to that, GEN Restaurant is 1.79 times more volatile than AEP Texas 345. It trades about -0.26 of its total potential returns per unit of risk. AEP Texas 345 is currently generating about 0.09 per unit of volatility. If you would invest  6,772  in AEP Texas 345 on October 27, 2024 and sell it today you would earn a total of  77.00  from holding AEP Texas 345 or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	68.42%
Values	Daily Returns

GEN Restaurant Group,  vs.  AEP Texas 345

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 unfluctuating 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.

AEP Texas 345

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEP Texas 345 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAK6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GEN Restaurant and 00108WAK6

The main advantage of trading using opposite GEN Restaurant and 00108WAK6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEN Restaurant position performs unexpectedly, 00108WAK6 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 00108WAK6 will offset losses from the drop in 00108WAK6's long position.

The idea behind GEN Restaurant Group, and AEP Texas 345 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.