Correlation Between Superior Industries and Gentex

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

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

Diversification Opportunities for Superior Industries and Gentex

-0.34

Correlation Coefficient

Superior Industries  Gentex

Very good diversification

The 3 months correlation between Superior and Gentex is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Superior Industries Internatio and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and Superior Industries 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 Superior Industries International are associated (or correlated) with Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Superior Industries i.e., Superior Industries and Gentex go up and down completely randomly.

Pair Corralation between Superior Industries and Gentex

Considering the 90-day investment horizon Superior Industries International is expected to under-perform the Gentex. In addition to that, Superior Industries is 1.86 times more volatile than Gentex. It trades about -0.13 of its total potential returns per unit of risk. Gentex is currently generating about 0.08 per unit of volatility. If you would invest  2,869  in Gentex on September 12, 2024 and sell it today you would earn a total of  221.00  from holding Gentex or generate 7.7% return on investment over 90 days.

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

Superior Industries Internatio  vs.  Gentex

Superior Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Industries International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Gentex

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Gentex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Superior Industries and Gentex

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

The idea behind Superior Industries International and Gentex 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.