Correlation Between Grande Asset and General Engineering
Can any of the company-specific risk be diversified away by investing in both Grande Asset and General Engineering 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 Grande Asset and General Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grande Asset Hotels and General Engineering Public, you can compare the effects of market volatilities on Grande Asset and General Engineering 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 Grande Asset with a short position of General Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Asset and General Engineering.
Diversification Opportunities for Grande Asset and General Engineering
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grande and General is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Grande Asset Hotels and General Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Engineering and Grande Asset 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 Grande Asset Hotels are associated (or correlated) with General Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Engineering has no effect on the direction of Grande Asset i.e., Grande Asset and General Engineering go up and down completely randomly.
Pair Corralation between Grande Asset and General Engineering
Assuming the 90 days trading horizon Grande Asset Hotels is expected to under-perform the General Engineering. In addition to that, Grande Asset is 1.02 times more volatile than General Engineering Public. It trades about -0.1 of its total potential returns per unit of risk. General Engineering Public is currently generating about -0.09 per unit of volatility. If you would invest 12.00 in General Engineering Public on September 2, 2024 and sell it today you would lose (2.00) from holding General Engineering Public or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grande Asset Hotels vs. General Engineering Public
Performance |
| Timeline |
| Grande Asset Hotels |
| General Engineering |
Grande Asset and General Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grande Asset and General Engineering
The main advantage of trading using opposite Grande Asset and General Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Asset position performs unexpectedly, General Engineering 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 General Engineering will offset losses from the drop in General Engineering's long position.| Grande Asset vs. Turnkey Communication Services | Grande Asset vs. Digital Telecommunications Infrastructure | Grande Asset vs. Lohakit Metal Public | Grande Asset vs. CPR Gomu Industrial |
| General Engineering vs. AAPICO Hitech Public | General Engineering vs. AP Public | General Engineering vs. Aikchol Hospital Public | General Engineering vs. Bank of Ayudhya |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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