Correlation Between Ritchie Bros and Genesis Land

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

By analyzing existing cross correlation between Ritchie Bros Auctioneers and Genesis Land Development, you can compare the effects of market volatilities on Ritchie Bros and Genesis Land 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 Ritchie Bros with a short position of Genesis Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and Genesis Land.

Diversification Opportunities for Ritchie Bros and Genesis Land

-0.46

Correlation Coefficient

Ritchie Bros  Genesis Land

Very good diversification

The 3 months correlation between Ritchie and Genesis is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Genesis Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Land Development and Ritchie Bros 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 Ritchie Bros Auctioneers are associated (or correlated) with Genesis Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Land Development has no effect on the direction of Ritchie Bros i.e., Ritchie Bros and Genesis Land go up and down completely randomly.

Pair Corralation between Ritchie Bros and Genesis Land

Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 0.6 times more return on investment than Genesis Land. However, Ritchie Bros Auctioneers is 1.68 times less risky than Genesis Land. It trades about 0.11 of its potential returns per unit of risk. Genesis Land Development is currently generating about 0.04 per unit of risk. If you would invest  10,008  in Ritchie Bros Auctioneers on September 24, 2024 and sell it today you would earn a total of  2,998  from holding Ritchie Bros Auctioneers or generate 29.96% return on investment over 90 days.

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

Ritchie Bros Auctioneers  vs.  Genesis Land Development

Ritchie Bros Auctioneers

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ritchie Bros Auctioneers are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ritchie Bros displayed solid returns over the last few months and may actually be approaching a breakup point.

Genesis Land Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Land Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ritchie Bros and Genesis Land

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

The idea behind Ritchie Bros Auctioneers and Genesis Land Development 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 Commodity Directory module to find actively traded commodities issued by global exchanges.