Correlation Between Honeywell Automation and Grasim Industries
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By analyzing existing cross correlation between Honeywell Automation India and Grasim Industries Limited, you can compare the effects of market volatilities on Honeywell Automation and Grasim Industries 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 Honeywell Automation with a short position of Grasim Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell Automation and Grasim Industries.
Diversification Opportunities for Honeywell Automation and Grasim Industries
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Honeywell and Grasim is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell Automation India and Grasim Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grasim Industries and Honeywell Automation 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 Honeywell Automation India are associated (or correlated) with Grasim Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grasim Industries has no effect on the direction of Honeywell Automation i.e., Honeywell Automation and Grasim Industries go up and down completely randomly.
Pair Corralation between Honeywell Automation and Grasim Industries
Assuming the 90 days trading horizon Honeywell Automation India is expected to under-perform the Grasim Industries. But the stock apears to be less risky and, when comparing its historical volatility, Honeywell Automation India is 1.48 times less risky than Grasim Industries. The stock trades about -0.48 of its potential returns per unit of risk. The Grasim Industries Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 259,060 in Grasim Industries Limited on September 5, 2024 and sell it today you would earn a total of 12,340 from holding Grasim Industries Limited or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honeywell Automation India vs. Grasim Industries Limited
Performance |
| Timeline |
| Honeywell Automation |
| Grasim Industries |
Honeywell Automation and Grasim Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell Automation and Grasim Industries
The main advantage of trading using opposite Honeywell Automation and Grasim Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell Automation position performs unexpectedly, Grasim Industries 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 Grasim Industries will offset losses from the drop in Grasim Industries' long position.The idea behind Honeywell Automation India and Grasim Industries Limited 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 the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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