Correlation Between Train Alliance and Genovis AB

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

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

Diversification Opportunities for Train Alliance and Genovis AB

-0.4

Correlation Coefficient

Train Alliance  Genovis AB

Very good diversification

The 3 months correlation between Train and Genovis is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Train Alliance Sweden and Genovis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovis AB and Train Alliance 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 Train Alliance Sweden are associated (or correlated) with Genovis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovis AB has no effect on the direction of Train Alliance i.e., Train Alliance and Genovis AB go up and down completely randomly.

Pair Corralation between Train Alliance and Genovis AB

Assuming the 90 days trading horizon Train Alliance Sweden is expected to under-perform the Genovis AB. But the stock apears to be less risky and, when comparing its historical volatility, Train Alliance Sweden is 2.85 times less risky than Genovis AB. The stock trades about -0.04 of its potential returns per unit of risk. The Genovis AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,455  in Genovis AB on December 3, 2024 and sell it today you would earn a total of  285.00  from holding Genovis AB or generate 11.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Train Alliance Sweden  vs.  Genovis AB

Train Alliance Sweden

Risk-Adjusted Performance

Very Weak

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

Genovis AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genovis AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Genovis AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Train Alliance and Genovis AB

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

The idea behind Train Alliance Sweden and Genovis AB 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.