Correlation Between Genuine Parts and Hurco Companies

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

By analyzing existing cross correlation between Genuine Parts Co and Hurco Companies, you can compare the effects of market volatilities on Genuine Parts and Hurco Companies 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 Genuine Parts with a short position of Hurco Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Hurco Companies.

Diversification Opportunities for Genuine Parts and Hurco Companies

-0.64

Correlation Coefficient

Genuine Parts  Hurco Companies

Excellent diversification

The 3 months correlation between Genuine and Hurco is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies and Genuine Parts 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 Genuine Parts Co are associated (or correlated) with Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of Genuine Parts i.e., Genuine Parts and Hurco Companies go up and down completely randomly.

Pair Corralation between Genuine Parts and Hurco Companies

Considering the 90-day investment horizon Genuine Parts Co is expected to generate 1.96 times more return on investment than Hurco Companies. However, Genuine Parts is 1.96 times more volatile than Hurco Companies. It trades about 0.08 of its potential returns per unit of risk. Hurco Companies is currently generating about -0.12 per unit of risk. If you would invest  15,041  in Genuine Parts Co on February 7, 2024 and sell it today you would earn a total of  628.00  from holding Genuine Parts Co or generate 4.18% return on investment over 90 days.

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

Genuine Parts Co  vs.  Hurco Companies

Genuine Parts

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Genuine Parts may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Hurco Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurco Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Genuine Parts and Hurco Companies

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

The idea behind Genuine Parts Co and Hurco Companies 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.