Correlation Between Gentex and Magna Mining

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

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

Diversification Opportunities for Gentex and Magna Mining

-0.19

Correlation Coefficient

Gentex  Magna Mining

Good diversification

The 3 months correlation between Gentex and Magna is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and Gentex 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 Gentex are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Gentex i.e., Gentex and Magna Mining go up and down completely randomly.

Pair Corralation between Gentex and Magna Mining

Given the investment horizon of 90 days Gentex is expected to under-perform the Magna Mining. But the stock apears to be less risky and, when comparing its historical volatility, Gentex is 2.13 times less risky than Magna Mining. The stock trades about -0.18 of its potential returns per unit of risk. The Magna Mining is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  114.00  in Magna Mining on January 7, 2025 and sell it today you would lose (21.00) from holding Magna Mining or give up 18.42% of portfolio value over 90 days.

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

Gentex  vs.  Magna Mining

Gentex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Magna Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magna Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gentex and Magna Mining

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

The idea behind Gentex and Magna Mining 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.