Correlation Between Gentera SAB and Regional SAB

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

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

Diversification Opportunities for Gentera SAB and Regional SAB

-0.16

Correlation Coefficient

Gentera SAB  Regional SAB

Good diversification

The 3 months correlation between Gentera and Regional is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gentera SAB de and Regional SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional SAB de and Gentera SAB 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 Gentera SAB de are associated (or correlated) with Regional SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional SAB de has no effect on the direction of Gentera SAB i.e., Gentera SAB and Regional SAB go up and down completely randomly.

Pair Corralation between Gentera SAB and Regional SAB

Assuming the 90 days trading horizon Gentera SAB de is expected to generate 1.22 times more return on investment than Regional SAB. However, Gentera SAB is 1.22 times more volatile than Regional SAB de. It trades about 0.1 of its potential returns per unit of risk. Regional SAB de is currently generating about -0.02 per unit of risk. If you would invest  2,450  in Gentera SAB de on August 31, 2024 and sell it today you would earn a total of  117.00  from holding Gentera SAB de or generate 4.78% return on investment over 90 days.

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

Gentera SAB de  vs.  Regional SAB de

Gentera SAB de

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gentera SAB de are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gentera SAB sustained solid returns over the last few months and may actually be approaching a breakup point.

Regional SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Gentera SAB and Regional SAB

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

The idea behind Gentera SAB de and Regional SAB de 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.