Correlation Between GEN Restaurant and NI Holdings

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

By analyzing existing cross correlation between GEN Restaurant Group, and NI Holdings, you can compare the effects of market volatilities on GEN Restaurant and NI Holdings 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 GEN Restaurant with a short position of NI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and NI Holdings.

Diversification Opportunities for GEN Restaurant and NI Holdings

0.25

Correlation Coefficient

GEN Restaurant  NI Holdings

Modest diversification

The 3 months correlation between GEN and NODK is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings and GEN Restaurant 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 GEN Restaurant Group, are associated (or correlated) with NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of GEN Restaurant i.e., GEN Restaurant and NI Holdings go up and down completely randomly.

Pair Corralation between GEN Restaurant and NI Holdings

Given the investment horizon of 90 days GEN Restaurant Group, is expected to generate 1.58 times more return on investment than NI Holdings. However, GEN Restaurant is 1.58 times more volatile than NI Holdings. It trades about 0.06 of its potential returns per unit of risk. NI Holdings is currently generating about 0.03 per unit of risk. If you would invest  817.00  in GEN Restaurant Group, on August 8, 2024 and sell it today you would earn a total of  74.00  from holding GEN Restaurant Group, or generate 9.06% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  NI Holdings

GEN Restaurant Group,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GEN Restaurant Group, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, GEN Restaurant may actually be approaching a critical reversion point that can send shares even higher in December 2024.

NI Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, NI Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with GEN Restaurant and NI Holdings

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

The idea behind GEN Restaurant Group, and NI Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.