Correlation Between Gencor Industries and CEA Industries
Can any of the company-specific risk be diversified away by investing in both Gencor Industries and CEA Industries 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 Gencor Industries and CEA Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gencor Industries and CEA Industries, you can compare the effects of market volatilities on Gencor Industries and CEA Industries 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 Gencor Industries with a short position of CEA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gencor Industries and CEA Industries.
Diversification Opportunities for Gencor Industries and CEA Industries
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gencor and CEA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gencor Industries and CEA Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries and Gencor Industries 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 Gencor Industries are associated (or correlated) with CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries has no effect on the direction of Gencor Industries i.e., Gencor Industries and CEA Industries go up and down completely randomly.
Pair Corralation between Gencor Industries and CEA Industries
Given the investment horizon of 90 days Gencor Industries is expected to generate 0.58 times more return on investment than CEA Industries. However, Gencor Industries is 1.74 times less risky than CEA Industries. It trades about 0.08 of its potential returns per unit of risk. CEA Industries is currently generating about -0.02 per unit of risk. If you would invest 1,068 in Gencor Industries on August 24, 2024 and sell it today you would earn a total of 1,166 from holding Gencor Industries or generate 109.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gencor Industries vs. CEA Industries
Performance |
| Timeline |
| Gencor Industries |
| CEA Industries |
Gencor Industries and CEA Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gencor Industries and CEA Industries
The main advantage of trading using opposite Gencor Industries and CEA Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gencor Industries position performs unexpectedly, CEA Industries 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 CEA Industries will offset losses from the drop in CEA Industries' long position.| Gencor Industries vs. Alamo Group | Gencor Industries vs. Manitowoc | Gencor Industries vs. Manitex International | Gencor Industries vs. Columbus McKinnon |
| CEA Industries vs. Rev Group | CEA Industries vs. Caterpillar | CEA Industries vs. Buhler Industries | CEA Industries vs. Austin Engineering Limited |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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