Correlation Between Gencor Industries and Komatsu
Can any of the company-specific risk be diversified away by investing in both Gencor Industries and Komatsu 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 Komatsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gencor Industries and Komatsu, you can compare the effects of market volatilities on Gencor Industries and Komatsu 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 Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gencor Industries and Komatsu.
Diversification Opportunities for Gencor Industries and Komatsu
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gencor and Komatsu is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gencor Industries and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu 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 Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Gencor Industries i.e., Gencor Industries and Komatsu go up and down completely randomly.
Pair Corralation between Gencor Industries and Komatsu
Given the investment horizon of 90 days Gencor Industries is expected to generate 0.95 times more return on investment than Komatsu. However, Gencor Industries is 1.06 times less risky than Komatsu. It trades about 0.06 of its potential returns per unit of risk. Komatsu is currently generating about 0.01 per unit of risk. If you would invest 1,938 in Gencor Industries on August 28, 2024 and sell it today you would earn a total of 304.00 from holding Gencor Industries or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gencor Industries vs. Komatsu
Performance |
| Timeline |
| Gencor Industries |
| Komatsu |
Gencor Industries and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gencor Industries and Komatsu
The main advantage of trading using opposite Gencor Industries and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gencor Industries position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Gencor Industries vs. Alamo Group | Gencor Industries vs. Manitowoc | Gencor Industries vs. Manitex International | Gencor Industries vs. Columbus McKinnon |
| Komatsu vs. Gencor Industries | Komatsu vs. Rev Group | Komatsu vs. Manitowoc | Komatsu vs. Columbus McKinnon |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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