Correlation Between Genertec Universal and Adidas AG
Can any of the company-specific risk be diversified away by investing in both Genertec Universal and Adidas AG 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 Genertec Universal and Adidas AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genertec Universal Medical and adidas AG, you can compare the effects of market volatilities on Genertec Universal and Adidas AG 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 Genertec Universal with a short position of Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genertec Universal and Adidas AG.
Diversification Opportunities for Genertec Universal and Adidas AG
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Genertec and Adidas is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Genertec Universal Medical and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG and Genertec Universal 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 Genertec Universal Medical are associated (or correlated) with Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of Genertec Universal i.e., Genertec Universal and Adidas AG go up and down completely randomly.
Pair Corralation between Genertec Universal and Adidas AG
Assuming the 90 days horizon Genertec Universal is expected to generate 2.41 times less return on investment than Adidas AG. In addition to that, Genertec Universal is 2.9 times more volatile than adidas AG. It trades about 0.02 of its total potential returns per unit of risk. adidas AG is currently generating about 0.12 per unit of volatility. If you would invest 11,800 in adidas AG on October 14, 2024 and sell it today you would earn a total of 300.00 from holding adidas AG or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genertec Universal Medical vs. adidas AG
Performance |
| Timeline |
| Genertec Universal |
| adidas AG |
Genertec Universal and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genertec Universal and Adidas AG
The main advantage of trading using opposite Genertec Universal and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genertec Universal position performs unexpectedly, Adidas AG 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 Adidas AG will offset losses from the drop in Adidas AG's long position.| Genertec Universal vs. NTG Nordic Transport | Genertec Universal vs. Information Services International Dentsu | Genertec Universal vs. Fukuyama Transporting Co | Genertec Universal vs. Data Modul AG |
| Adidas AG vs. MEDICAL FACILITIES NEW | Adidas AG vs. CompuGroup Medical SE | Adidas AG vs. Diamyd Medical AB | Adidas AG vs. Genertec Universal Medical |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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