Correlation Between Barloworld and Greystone Logistics

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

By analyzing existing cross correlation between Barloworld Ltd ADR and Greystone Logistics, you can compare the effects of market volatilities on Barloworld and Greystone Logistics 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 Barloworld with a short position of Greystone Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Greystone Logistics.

Diversification Opportunities for Barloworld and Greystone Logistics

0.36

Correlation Coefficient

Barloworld  Greystone Logistics

Weak diversification

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

Pair Corralation between Barloworld and Greystone Logistics

Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Greystone Logistics. In addition to that, Barloworld is 1.79 times more volatile than Greystone Logistics. It trades about -0.04 of its total potential returns per unit of risk. Greystone Logistics is currently generating about 0.0 per unit of volatility. If you would invest  101.00  in Greystone Logistics on December 1, 2024 and sell it today you would lose (2.00) from holding Greystone Logistics or give up 1.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.33%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Greystone Logistics

Barloworld ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Greystone Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greystone Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Greystone Logistics is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Barloworld and Greystone Logistics

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

The idea behind Barloworld Ltd ADR and Greystone Logistics 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 Transaction History module to view history of all your transactions and understand their impact on performance.