Correlation Between Gifore Agricultural and Aluminum Corp

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

By analyzing existing cross correlation between Gifore Agricultural Machinery and Aluminum Corp of, you can compare the effects of market volatilities on Gifore Agricultural and Aluminum Corp 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 Gifore Agricultural with a short position of Aluminum Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gifore Agricultural and Aluminum Corp.

Diversification Opportunities for Gifore Agricultural and Aluminum Corp

-0.36

Correlation Coefficient

Gifore Agricultural  Aluminum Corp

Very good diversification

The 3 months correlation between Gifore and Aluminum is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gifore Agricultural Machinery and Aluminum Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Corp and Gifore Agricultural 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 Gifore Agricultural Machinery are associated (or correlated) with Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Gifore Agricultural i.e., Gifore Agricultural and Aluminum Corp go up and down completely randomly.

Pair Corralation between Gifore Agricultural and Aluminum Corp

Assuming the 90 days trading horizon Gifore Agricultural Machinery is expected to generate 1.72 times more return on investment than Aluminum Corp. However, Gifore Agricultural is 1.72 times more volatile than Aluminum Corp of. It trades about 0.07 of its potential returns per unit of risk. Aluminum Corp of is currently generating about -0.08 per unit of risk. If you would invest  453.00  in Gifore Agricultural Machinery on October 23, 2024 and sell it today you would earn a total of  61.00  from holding Gifore Agricultural Machinery or generate 13.47% return on investment over 90 days.

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

Gifore Agricultural Machinery  vs.  Aluminum Corp of

Gifore Agricultural

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gifore Agricultural Machinery are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gifore Agricultural sustained solid returns over the last few months and may actually be approaching a breakup point.

Aluminum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum Corp of 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 Gifore Agricultural and Aluminum Corp

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

The idea behind Gifore Agricultural Machinery and Aluminum Corp of 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.