Correlation Between Gentas Genel and MEGA METAL

Can any of the company-specific risk be diversified away by investing in both Gentas Genel and MEGA METAL 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 Gentas Genel and MEGA METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gentas Genel Metal and MEGA METAL, you can compare the effects of market volatilities on Gentas Genel and MEGA METAL 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 Gentas Genel with a short position of MEGA METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentas Genel and MEGA METAL.

Diversification Opportunities for Gentas Genel and MEGA METAL

0.35

Correlation Coefficient

Gentas Genel  MEGA METAL

Weak diversification

The 3 months correlation between Gentas and MEGA is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gentas Genel Metal and MEGA METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEGA METAL and Gentas Genel 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 Gentas Genel Metal are associated (or correlated) with MEGA METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEGA METAL has no effect on the direction of Gentas Genel i.e., Gentas Genel and MEGA METAL go up and down completely randomly.

Pair Corralation between Gentas Genel and MEGA METAL

Assuming the 90 days trading horizon Gentas Genel Metal is expected to generate 1.14 times more return on investment than MEGA METAL. However, Gentas Genel is 1.14 times more volatile than MEGA METAL. It trades about 0.08 of its potential returns per unit of risk. MEGA METAL is currently generating about -0.11 per unit of risk. If you would invest  793.00  in Gentas Genel Metal on September 2, 2024 and sell it today you would earn a total of  82.00  from holding Gentas Genel Metal or generate 10.34% return on investment over 90 days.

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

Gentas Genel Metal  vs.  MEGA METAL

Gentas Genel Metal

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gentas Genel Metal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Gentas Genel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MEGA METAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEGA METAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Gentas Genel and MEGA METAL

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

The idea behind Gentas Genel Metal and MEGA METAL 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.