Correlation Between Industrial Investment and Genus Paper

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

By analyzing existing cross correlation between Industrial Investment Trust and Genus Paper Boards, you can compare the effects of market volatilities on Industrial Investment and Genus Paper 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 Industrial Investment with a short position of Genus Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and Genus Paper.

Diversification Opportunities for Industrial Investment and Genus Paper

-0.51

Correlation Coefficient

Industrial Investment  Genus Paper

Excellent diversification

The 3 months correlation between Industrial and Genus is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Genus Paper Boards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genus Paper Boards and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with Genus Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genus Paper Boards has no effect on the direction of Industrial Investment i.e., Industrial Investment and Genus Paper go up and down completely randomly.

Pair Corralation between Industrial Investment and Genus Paper

Assuming the 90 days trading horizon Industrial Investment Trust is expected to under-perform the Genus Paper. In addition to that, Industrial Investment is 1.09 times more volatile than Genus Paper Boards. It trades about -0.08 of its total potential returns per unit of risk. Genus Paper Boards is currently generating about -0.01 per unit of volatility. If you would invest  2,236  in Genus Paper Boards on October 6, 2024 and sell it today you would lose (60.00) from holding Genus Paper Boards or give up 2.68% of portfolio value over 90 days.

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

Industrial Investment Trust  vs.  Genus Paper Boards

Industrial Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Genus Paper Boards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genus Paper Boards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Genus Paper is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Industrial Investment and Genus Paper

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

The idea behind Industrial Investment Trust and Genus Paper Boards 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.