Correlation Between Generation Capital and Propert Buil

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

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

Diversification Opportunities for Generation Capital and Propert Buil

0.9

Correlation Coefficient

Generation Capital  Propert Buil

Almost no diversification

The 3 months correlation between Generation and Propert is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Generation Capital and Propert Buil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Propert Buil and Generation Capital 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 Capital are associated (or correlated) with Propert Buil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Propert Buil has no effect on the direction of Generation Capital i.e., Generation Capital and Propert Buil go up and down completely randomly.

Pair Corralation between Generation Capital and Propert Buil

Assuming the 90 days trading horizon Generation Capital is expected to generate 0.85 times more return on investment than Propert Buil. However, Generation Capital is 1.18 times less risky than Propert Buil. It trades about 0.22 of its potential returns per unit of risk. Propert Buil is currently generating about 0.1 per unit of risk. If you would invest  6,210  in Generation Capital on September 5, 2024 and sell it today you would earn a total of  1,610  from holding Generation Capital or generate 25.93% return on investment over 90 days.

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

Generation Capital  vs.  Propert Buil

Generation Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Generation Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Propert Buil

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Generation Capital and Propert Buil

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

The idea behind Generation Capital and Propert Buil 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.