Correlation Between Generation Alpha and King Resources

Can any of the company-specific risk be diversified away by investing in both Generation Alpha and King Resources 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 Generation Alpha and King Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Generation Alpha and King Resources, you can compare the effects of market volatilities on Generation Alpha and King Resources 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 Generation Alpha with a short position of King Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Alpha and King Resources.

Diversification Opportunities for Generation Alpha and King Resources

0.04

Correlation Coefficient

Generation Alpha  King Resources

Significant diversification

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

Pair Corralation between Generation Alpha and King Resources

Given the investment horizon of 90 days Generation Alpha is expected to generate 1.9 times more return on investment than King Resources. However, Generation Alpha is 1.9 times more volatile than King Resources. It trades about 0.06 of its potential returns per unit of risk. King Resources is currently generating about 0.11 per unit of risk. If you would invest  0.03  in Generation Alpha on September 14, 2024 and sell it today you would lose (0.02) from holding Generation Alpha or give up 66.67% of portfolio value over 90 days.

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

Generation Alpha  vs.  King Resources

Generation Alpha

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Alpha are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Generation Alpha disclosed solid returns over the last few months and may actually be approaching a breakup point.

King Resources

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in King Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, King Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generation Alpha and King Resources

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

The idea behind Generation Alpha and King Resources 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.