Correlation Between Gentex and SoftBrands

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

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

Diversification Opportunities for Gentex and SoftBrands

0.0

Correlation Coefficient

Gentex  SoftBrands

Pay attention - limited upside

The 3 months correlation between Gentex and SoftBrands is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and SoftBrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBrands 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 SoftBrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBrands has no effect on the direction of Gentex i.e., Gentex and SoftBrands go up and down completely randomly.

Pair Corralation between Gentex and SoftBrands

If you would invest  0.00  in SoftBrands on October 24, 2024 and sell it today you would earn a total of  0.00  from holding SoftBrands or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Gentex  vs.  SoftBrands

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 fairly strong basic indicators, Gentex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SoftBrands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SoftBrands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, SoftBrands is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gentex and SoftBrands

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

The idea behind Gentex and SoftBrands 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.