Correlation Between Genus Power and LSI Industries

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

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

Diversification Opportunities for Genus Power and LSI Industries

0.44

Correlation Coefficient

Genus Power  LSI Industries

Very weak diversification

The 3 months correlation between Genus and LSI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Genus Power Infrastructures and LSI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Industries and Genus Power 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 Genus Power Infrastructures are associated (or correlated) with LSI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Industries has no effect on the direction of Genus Power i.e., Genus Power and LSI Industries go up and down completely randomly.

Pair Corralation between Genus Power and LSI Industries

Assuming the 90 days trading horizon Genus Power Infrastructures is expected to generate 1.99 times more return on investment than LSI Industries. However, Genus Power is 1.99 times more volatile than LSI Industries. It trades about 0.17 of its potential returns per unit of risk. LSI Industries is currently generating about -0.18 per unit of risk. If you would invest  27,370  in Genus Power Infrastructures on March 11, 2024 and sell it today you would earn a total of  3,075  from holding Genus Power Infrastructures or generate 11.23% return on investment over 90 days.

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

Genus Power Infrastructures  vs.  LSI Industries

Genus Power Infrastr

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genus Power Infrastructures are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Genus Power displayed solid returns over the last few months and may actually be approaching a breakup point.

LSI Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LSI Industries is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Genus Power and LSI Industries

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

The idea behind Genus Power Infrastructures and LSI Industries 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.