Correlation Between GRG Banking and Industrial

Can any of the company-specific risk be diversified away by investing in both GRG Banking and Industrial 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 GRG Banking and Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRG Banking Equipment and Industrial and Commercial, you can compare the effects of market volatilities on GRG Banking and Industrial 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 GRG Banking with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRG Banking and Industrial.

Diversification Opportunities for GRG Banking and Industrial

0.7

Correlation Coefficient

GRG Banking  Industrial

Poor diversification

The 3 months correlation between GRG and Industrial is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GRG Banking Equipment and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and GRG Banking 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 GRG Banking Equipment are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of GRG Banking i.e., GRG Banking and Industrial go up and down completely randomly.

Pair Corralation between GRG Banking and Industrial

Assuming the 90 days trading horizon GRG Banking is expected to generate 2.85 times less return on investment than Industrial. In addition to that, GRG Banking is 2.03 times more volatile than Industrial and Commercial. It trades about 0.02 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.1 per unit of volatility. If you would invest  478.00  in Industrial and Commercial on September 21, 2024 and sell it today you would earn a total of  171.00  from holding Industrial and Commercial or generate 35.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GRG Banking Equipment  vs.  Industrial and Commercial

GRG Banking Equipment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRG Banking Equipment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GRG Banking sustained solid returns over the last few months and may actually be approaching a breakup point.

Industrial and Commercial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRG Banking and Industrial

The main advantage of trading using opposite GRG Banking and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRG Banking position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.

The idea behind GRG Banking Equipment and Industrial and Commercial 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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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 CEOs Directory module to screen CEOs from public companies around the world.