Correlation Between Grand Plastic and Tehmag Foods

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

By analyzing existing cross correlation between Grand Plastic Technology and Tehmag Foods, you can compare the effects of market volatilities on Grand Plastic and Tehmag Foods 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 Grand Plastic with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Plastic and Tehmag Foods.

Diversification Opportunities for Grand Plastic and Tehmag Foods

-0.72

Correlation Coefficient

Grand Plastic  Tehmag Foods

Pay attention - limited upside

The 3 months correlation between Grand and Tehmag is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Grand Plastic Technology and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and Grand Plastic 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 Grand Plastic Technology are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Grand Plastic i.e., Grand Plastic and Tehmag Foods go up and down completely randomly.

Pair Corralation between Grand Plastic and Tehmag Foods

Assuming the 90 days trading horizon Grand Plastic Technology is expected to generate 5.85 times more return on investment than Tehmag Foods. However, Grand Plastic is 5.85 times more volatile than Tehmag Foods. It trades about 0.12 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.08 per unit of risk. If you would invest  23,464  in Grand Plastic Technology on October 26, 2024 and sell it today you would earn a total of  125,536  from holding Grand Plastic Technology or generate 535.02% return on investment over 90 days.

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

Grand Plastic Technology  vs.  Tehmag Foods

Grand Plastic Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Plastic Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grand Plastic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tehmag Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tehmag Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tehmag Foods is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Grand Plastic and Tehmag Foods

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

The idea behind Grand Plastic Technology and Tehmag Foods 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.