Correlation Between Elite Color and GRG Banking

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

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

Diversification Opportunities for Elite Color and GRG Banking

0.67

Correlation Coefficient

Elite Color  GRG Banking

Poor diversification

The 3 months correlation between Elite and GRG is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Elite Color Environmental and GRG Banking Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRG Banking Equipment and Elite Color 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 Elite Color Environmental are associated (or correlated) with GRG Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRG Banking Equipment has no effect on the direction of Elite Color i.e., Elite Color and GRG Banking go up and down completely randomly.

Pair Corralation between Elite Color and GRG Banking

Assuming the 90 days trading horizon Elite Color is expected to generate 5.44 times less return on investment than GRG Banking. In addition to that, Elite Color is 1.0 times more volatile than GRG Banking Equipment. It trades about 0.0 of its total potential returns per unit of risk. GRG Banking Equipment is currently generating about 0.02 per unit of volatility. If you would invest  955.00  in GRG Banking Equipment on October 9, 2024 and sell it today you would earn a total of  122.00  from holding GRG Banking Equipment or generate 12.77% return on investment over 90 days.

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

Elite Color Environmental  vs.  GRG Banking Equipment

Elite Color Environmental

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Color Environmental are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Elite Color is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GRG Banking Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRG Banking Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Elite Color and GRG Banking

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

The idea behind Elite Color Environmental and GRG Banking Equipment 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.