Correlation Between Cooper Stnd and Gentherm

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

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

Diversification Opportunities for Cooper Stnd and Gentherm

-0.51

Correlation Coefficient

Cooper Stnd  Gentherm

Excellent diversification

The 3 months correlation between Cooper and Gentherm is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Stnd and Gentherm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentherm and Cooper Stnd 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 Cooper Stnd are associated (or correlated) with Gentherm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentherm has no effect on the direction of Cooper Stnd i.e., Cooper Stnd and Gentherm go up and down completely randomly.

Pair Corralation between Cooper Stnd and Gentherm

Considering the 90-day investment horizon Cooper Stnd is expected to generate 2.5 times more return on investment than Gentherm. However, Cooper Stnd is 2.5 times more volatile than Gentherm. It trades about 0.02 of its potential returns per unit of risk. Gentherm is currently generating about -0.17 per unit of risk. If you would invest  1,615  in Cooper Stnd on February 5, 2024 and sell it today you would earn a total of  0.00  from holding Cooper Stnd or generate 0.0% return on investment over 90 days.

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

Cooper Stnd  vs.  Gentherm

Cooper Stnd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cooper Stnd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cooper Stnd is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Gentherm

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gentherm are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Gentherm may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Cooper Stnd and Gentherm

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

The idea behind Cooper Stnd and Gentherm 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.