Correlation Between GRIPM Advanced and Dirui Industrial

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

By analyzing existing cross correlation between GRIPM Advanced Materials and Dirui Industrial Co, you can compare the effects of market volatilities on GRIPM Advanced and Dirui 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 GRIPM Advanced with a short position of Dirui Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRIPM Advanced and Dirui Industrial.

Diversification Opportunities for GRIPM Advanced and Dirui Industrial

0.32

Correlation Coefficient

GRIPM Advanced  Dirui Industrial

Weak diversification

The 3 months correlation between GRIPM and Dirui is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GRIPM Advanced Materials and Dirui Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dirui Industrial and GRIPM Advanced 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 GRIPM Advanced Materials are associated (or correlated) with Dirui Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dirui Industrial has no effect on the direction of GRIPM Advanced i.e., GRIPM Advanced and Dirui Industrial go up and down completely randomly.

Pair Corralation between GRIPM Advanced and Dirui Industrial

Assuming the 90 days trading horizon GRIPM Advanced Materials is expected to generate 0.9 times more return on investment than Dirui Industrial. However, GRIPM Advanced Materials is 1.11 times less risky than Dirui Industrial. It trades about 0.12 of its potential returns per unit of risk. Dirui Industrial Co is currently generating about -0.04 per unit of risk. If you would invest  3,253  in GRIPM Advanced Materials on December 3, 2024 and sell it today you would earn a total of  496.00  from holding GRIPM Advanced Materials or generate 15.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

GRIPM Advanced Materials  vs.  Dirui Industrial Co

GRIPM Advanced Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GRIPM Advanced Materials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GRIPM Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Dirui Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dirui Industrial Co 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 GRIPM Advanced and Dirui Industrial

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

The idea behind GRIPM Advanced Materials and Dirui Industrial Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.