Correlation Between General Mills and TechnoPro Holdings
Can any of the company-specific risk be diversified away by investing in both General Mills and TechnoPro Holdings 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 Mills and TechnoPro Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and TechnoPro Holdings, you can compare the effects of market volatilities on General Mills and TechnoPro Holdings 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 Mills with a short position of TechnoPro Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and TechnoPro Holdings.
Diversification Opportunities for General Mills and TechnoPro Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and TechnoPro is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and TechnoPro Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnoPro Holdings and General Mills 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 Mills are associated (or correlated) with TechnoPro Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnoPro Holdings has no effect on the direction of General Mills i.e., General Mills and TechnoPro Holdings go up and down completely randomly.
Pair Corralation between General Mills and TechnoPro Holdings
Assuming the 90 days horizon General Mills is expected to generate 0.86 times more return on investment than TechnoPro Holdings. However, General Mills is 1.16 times less risky than TechnoPro Holdings. It trades about 0.36 of its potential returns per unit of risk. TechnoPro Holdings is currently generating about 0.01 per unit of risk. If you would invest 9,097 in General Mills on November 28, 2024 and sell it today you would earn a total of 1,541 from holding General Mills or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. TechnoPro Holdings
Performance |
| Timeline |
| General Mills |
| TechnoPro Holdings |
General Mills and TechnoPro Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and TechnoPro Holdings
The main advantage of trading using opposite General Mills and TechnoPro Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, TechnoPro Holdings 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 TechnoPro Holdings will offset losses from the drop in TechnoPro Holdings' long position.| General Mills vs. Gladstone Investment | General Mills vs. STRAYER EDUCATION | General Mills vs. Tamburi Investment Partners | General Mills vs. CHRYSALIS INVESTMENTS LTD |
| TechnoPro Holdings vs. SBM OFFSHORE | TechnoPro Holdings vs. SAN MIGUEL BREWERY | TechnoPro Holdings vs. Nomad Foods | TechnoPro Holdings vs. Tsingtao Brewery |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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