Correlation Between GEN Restaurant and 06051GGA1

Can any of the company-specific risk be diversified away by investing in both GEN Restaurant and 06051GGA1 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 06051GGA1 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 BANK AMER P, you can compare the effects of market volatilities on GEN Restaurant and 06051GGA1 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 06051GGA1. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and 06051GGA1.

Diversification Opportunities for GEN Restaurant and 06051GGA1

0.31

Correlation Coefficient

GEN Restaurant  06051GGA1

Weak diversification

The 3 months correlation between GEN and 06051GGA1 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and BANK AMER P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK AMER P 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 06051GGA1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK AMER P has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and 06051GGA1 go up and down completely randomly.

Pair Corralation between GEN Restaurant and 06051GGA1

Given the investment horizon of 90 days GEN Restaurant Group, is expected to generate 129.51 times more return on investment than 06051GGA1. However, GEN Restaurant is 129.51 times more volatile than BANK AMER P. It trades about 0.05 of its potential returns per unit of risk. BANK AMER P is currently generating about -0.01 per unit of risk. If you would invest  0.00  in GEN Restaurant Group, on October 10, 2024 and sell it today you would earn a total of  746.00  from holding GEN Restaurant Group, or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.3%
Values	Daily Returns

GEN Restaurant Group,  vs.  BANK AMER P

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

BANK AMER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK AMER P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 06051GGA1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GEN Restaurant and 06051GGA1

The main advantage of trading using opposite GEN Restaurant and 06051GGA1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEN Restaurant position performs unexpectedly, 06051GGA1 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 06051GGA1 will offset losses from the drop in 06051GGA1's long position.

The idea behind GEN Restaurant Group, and BANK AMER P 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.