Correlation Between NuGene International and Pennexx Foods

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

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

Diversification Opportunities for NuGene International and Pennexx Foods

0.38

Correlation Coefficient

NuGene International  Pennexx Foods

Weak diversification

The 3 months correlation between NuGene and Pennexx is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NuGene International and Pennexx Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennexx Foods and NuGene International 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 NuGene International are associated (or correlated) with Pennexx Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennexx Foods has no effect on the direction of NuGene International i.e., NuGene International and Pennexx Foods go up and down completely randomly.

Pair Corralation between NuGene International and Pennexx Foods

Given the investment horizon of 90 days NuGene International is expected to generate 1.74 times more return on investment than Pennexx Foods. However, NuGene International is 1.74 times more volatile than Pennexx Foods. It trades about 0.07 of its potential returns per unit of risk. Pennexx Foods is currently generating about -0.06 per unit of risk. If you would invest  0.60  in NuGene International on October 11, 2024 and sell it today you would lose (0.10) from holding NuGene International or give up 16.67% of portfolio value over 90 days.

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

NuGene International  vs.  Pennexx Foods

NuGene International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NuGene International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, NuGene International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pennexx Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennexx Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Pennexx Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NuGene International and Pennexx Foods

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

The idea behind NuGene International and Pennexx Foods 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.