Correlation Between Gentherm and Cooper Stnd

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

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

Diversification Opportunities for Gentherm and Cooper Stnd

-0.14

Correlation Coefficient

Gentherm  Cooper Stnd

Good diversification

The 3 months correlation between Gentherm and Cooper is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gentherm and Cooper Stnd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Stnd and Gentherm 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 Gentherm are associated (or correlated) with Cooper Stnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Stnd has no effect on the direction of Gentherm i.e., Gentherm and Cooper Stnd go up and down completely randomly.

Pair Corralation between Gentherm and Cooper Stnd

Given the investment horizon of 90 days Gentherm is expected to under-perform the Cooper Stnd. But the stock apears to be less risky and, when comparing its historical volatility, Gentherm is 1.99 times less risky than Cooper Stnd. The stock trades about -0.26 of its potential returns per unit of risk. The Cooper Stnd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,369  in Cooper Stnd on December 29, 2024 and sell it today you would earn a total of  235.00  from holding Cooper Stnd or generate 17.17% return on investment over 90 days.

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

Gentherm  vs.  Cooper Stnd

Gentherm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gentherm 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cooper Stnd

Risk-Adjusted Performance

Modest

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

Pair Trading with Gentherm and Cooper Stnd

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

The idea behind Gentherm and Cooper Stnd 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.