Correlation Between Giant Manufacturing and Gourmet Master
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Gourmet Master 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 Giant Manufacturing and Gourmet Master into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and Gourmet Master Co, you can compare the effects of market volatilities on Giant Manufacturing and Gourmet Master 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 Giant Manufacturing with a short position of Gourmet Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Gourmet Master.
Diversification Opportunities for Giant Manufacturing and Gourmet Master
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Giant and Gourmet is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Gourmet Master Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gourmet Master and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Gourmet Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gourmet Master has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Gourmet Master go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Gourmet Master
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to generate 1.13 times more return on investment than Gourmet Master. However, Giant Manufacturing is 1.13 times more volatile than Gourmet Master Co. It trades about -0.02 of its potential returns per unit of risk. Gourmet Master Co is currently generating about -0.03 per unit of risk. If you would invest 14,900 in Giant Manufacturing Co on October 23, 2024 and sell it today you would lose (150.00) from holding Giant Manufacturing Co or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Gourmet Master Co
Performance |
| Timeline |
| Giant Manufacturing |
| Gourmet Master |
Giant Manufacturing and Gourmet Master Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Gourmet Master
The main advantage of trading using opposite Giant Manufacturing and Gourmet Master positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Gourmet Master 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 Gourmet Master will offset losses from the drop in Gourmet Master's long position.| Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises Corp |
| Gourmet Master vs. Wowprime Corp | Gourmet Master vs. President Chain Store | Gourmet Master vs. Eclat Textile Co | Gourmet Master vs. Giant Manufacturing Co |
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 the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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