Correlation Between Gentex and SEAZEN GROUP

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

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

Diversification Opportunities for Gentex and SEAZEN GROUP

-0.34

Correlation Coefficient

Gentex  SEAZEN GROUP

Very good diversification

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

Pair Corralation between Gentex and SEAZEN GROUP

Assuming the 90 days horizon Gentex is expected to generate 0.45 times more return on investment than SEAZEN GROUP. However, Gentex is 2.22 times less risky than SEAZEN GROUP. It trades about 0.06 of its potential returns per unit of risk. SEAZEN GROUP LTD is currently generating about -0.09 per unit of risk. If you would invest  2,700  in Gentex on September 23, 2024 and sell it today you would earn a total of  100.00  from holding Gentex or generate 3.7% return on investment over 90 days.

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

Gentex  vs.  SEAZEN GROUP LTD

Gentex

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gentex is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SEAZEN GROUP LTD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEAZEN GROUP LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, SEAZEN GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gentex and SEAZEN GROUP

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

The idea behind Gentex and SEAZEN GROUP LTD 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.