Correlation Between Gentex and Ardelyx

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

By analyzing existing cross correlation between Gentex and Ardelyx, you can compare the effects of market volatilities on Gentex and Ardelyx 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 Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Ardelyx.

Diversification Opportunities for Gentex and Ardelyx

0.28

Correlation Coefficient

Gentex  Ardelyx

Modest diversification

The 3 months correlation between Gentex and Ardelyx is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx 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 Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Gentex i.e., Gentex and Ardelyx go up and down completely randomly.

Pair Corralation between Gentex and Ardelyx

Given the investment horizon of 90 days Gentex is expected to under-perform the Ardelyx. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 3.77 times less risky than Ardelyx. The stock trades about 0.0 of its potential returns per unit of risk. The Ardelyx is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  308.00  in Ardelyx on October 25, 2024 and sell it today you would earn a total of  242.50  from holding Ardelyx or generate 78.73% return on investment over 90 days.

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

Gentex  vs.  Ardelyx

Gentex

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ardelyx

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ardelyx are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Ardelyx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gentex and Ardelyx

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

The idea behind Gentex and Ardelyx 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.