Correlation Between Gentex and Generative

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

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

Diversification Opportunities for Gentex and Generative

0.11

Correlation Coefficient

Gentex  Generative

Average diversification

The 3 months correlation between Gentex and Generative is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Generative AI Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generative AI Solutions and Gentex 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 Gentex are associated (or correlated) with Generative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generative AI Solutions has no effect on the direction of Gentex i.e., Gentex and Generative go up and down completely randomly.

Pair Corralation between Gentex and Generative

Given the investment horizon of 90 days Gentex is expected to under-perform the Generative. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 8.66 times less risky than Generative. The stock trades about -0.17 of its potential returns per unit of risk. The Generative AI Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Generative AI Solutions on December 22, 2024 and sell it today you would earn a total of  1.96  from holding Generative AI Solutions or generate 28.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Gentex  vs.  Generative AI Solutions

Gentex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Generative AI Solutions

Risk-Adjusted Performance

OK

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

Pair Trading with Gentex and Generative

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

The idea behind Gentex and Generative AI Solutions 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.