Correlation Between Grand Prix and Interlink Communication
Can any of the company-specific risk be diversified away by investing in both Grand Prix and Interlink Communication 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 Grand Prix and Interlink Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Prix International and Interlink Communication Public, you can compare the effects of market volatilities on Grand Prix and Interlink Communication 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 Grand Prix with a short position of Interlink Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Prix and Interlink Communication.
Diversification Opportunities for Grand Prix and Interlink Communication
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grand and Interlink is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Grand Prix International and Interlink Communication Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interlink Communication and Grand Prix 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 Grand Prix International are associated (or correlated) with Interlink Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interlink Communication has no effect on the direction of Grand Prix i.e., Grand Prix and Interlink Communication go up and down completely randomly.
Pair Corralation between Grand Prix and Interlink Communication
Assuming the 90 days trading horizon Grand Prix International is expected to generate 1.24 times more return on investment than Interlink Communication. However, Grand Prix is 1.24 times more volatile than Interlink Communication Public. It trades about 0.18 of its potential returns per unit of risk. Interlink Communication Public is currently generating about 0.05 per unit of risk. If you would invest 158.00 in Grand Prix International on November 28, 2024 and sell it today you would earn a total of 15.00 from holding Grand Prix International or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Grand Prix International vs. Interlink Communication Public
Performance |
| Timeline |
| Grand Prix International |
| Interlink Communication |
Grand Prix and Interlink Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Prix and Interlink Communication
The main advantage of trading using opposite Grand Prix and Interlink Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Prix position performs unexpectedly, Interlink Communication 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 Interlink Communication will offset losses from the drop in Interlink Communication's long position.| Grand Prix vs. Interlink Communication Public | Grand Prix vs. Aqua Public | Grand Prix vs. BEC World Public | Grand Prix vs. Grande Asset Hotels |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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