Correlation Between Generation Capital and Bet Shemesh

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

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

Diversification Opportunities for Generation Capital and Bet Shemesh

-0.63

Correlation Coefficient

Generation Capital  Bet Shemesh

Excellent diversification

The 3 months correlation between Generation and Bet is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Generation Capital and Bet Shemesh Engines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bet Shemesh Engines and Generation Capital 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 Generation Capital are associated (or correlated) with Bet Shemesh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bet Shemesh Engines has no effect on the direction of Generation Capital i.e., Generation Capital and Bet Shemesh go up and down completely randomly.

Pair Corralation between Generation Capital and Bet Shemesh

Assuming the 90 days trading horizon Generation Capital is expected to under-perform the Bet Shemesh. But the stock apears to be less risky and, when comparing its historical volatility, Generation Capital is 1.54 times less risky than Bet Shemesh. The stock trades about -0.22 of its potential returns per unit of risk. The Bet Shemesh Engines is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,191,000  in Bet Shemesh Engines on February 29, 2024 and sell it today you would earn a total of  794,000  from holding Bet Shemesh Engines or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.87%
Values	Daily Returns

Generation Capital  vs.  Bet Shemesh Engines

Generation Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generation Capital 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 somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Bet Shemesh Engines

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bet Shemesh Engines are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bet Shemesh sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generation Capital and Bet Shemesh

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

The idea behind Generation Capital and Bet Shemesh Engines 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.