Correlation Between General Employment and Optimism

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Can any of the company-specific risk be diversified away by investing in both General Employment and Optimism 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 General Employment and Optimism into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Employment Enterprises and Optimism, you can compare the effects of market volatilities on General Employment and Optimism 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 General Employment with a short position of Optimism. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Employment and Optimism.

Diversification Opportunities for General Employment and Optimism

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between General and Optimism is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Employment Enterprises and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism and General Employment 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 General Employment Enterprises are associated (or correlated) with Optimism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimism has no effect on the direction of General Employment i.e., General Employment and Optimism go up and down completely randomly.

Pair Corralation between General Employment and Optimism

Considering the 90-day investment horizon General Employment Enterprises is expected to generate 0.2 times more return on investment than Optimism. However, General Employment Enterprises is 5.13 times less risky than Optimism. It trades about 0.43 of its potential returns per unit of risk. Optimism is currently generating about 0.02 per unit of risk. If you would invest  63.00  in General Employment Enterprises on September 1, 2022 and sell it today you would earn a total of  15.00  from holding General Employment Enterprises or generate 23.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

General Employment Enterprises  vs.  Optimism

 Performance (%) 
       Timeline  
General Employment 
General Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Employment Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, General Employment may actually be approaching a critical reversion point that can send shares even higher in December 2022.

General Price Channel

Optimism 
Optimism Performance
0 of 100
Over the last 90 days Optimism has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Optimism is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Optimism Price Channel

General Employment and Optimism Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Employment and Optimism

The main advantage of trading using opposite General Employment and Optimism positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Employment position performs unexpectedly, Optimism 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 Optimism will offset losses from the drop in Optimism's long position.
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The idea behind General Employment Enterprises and Optimism 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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Check out your portfolio center. 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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