Correlation Between GWILLI FOOD and CN RAILWAY

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

By analyzing existing cross correlation between GWILLI FOOD and CN RAILWAY S, you can compare the effects of market volatilities on GWILLI FOOD and CN RAILWAY 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 GWILLI FOOD with a short position of CN RAILWAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of GWILLI FOOD and CN RAILWAY.

Diversification Opportunities for GWILLI FOOD and CN RAILWAY

0.2

Correlation Coefficient

GWILLI FOOD  CN RAILWAY

Modest diversification

The 3 months correlation between GWILLI and 4FF is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GWILLI FOOD and CN RAILWAY S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN RAILWAY S and GWILLI FOOD 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 GWILLI FOOD are associated (or correlated) with CN RAILWAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN RAILWAY S has no effect on the direction of GWILLI FOOD i.e., GWILLI FOOD and CN RAILWAY go up and down completely randomly.

Pair Corralation between GWILLI FOOD and CN RAILWAY

Assuming the 90 days trading horizon GWILLI FOOD is expected to generate 1.8 times more return on investment than CN RAILWAY. However, GWILLI FOOD is 1.8 times more volatile than CN RAILWAY S. It trades about 0.18 of its potential returns per unit of risk. CN RAILWAY S is currently generating about -0.01 per unit of risk. If you would invest  1,140  in GWILLI FOOD on October 25, 2024 and sell it today you would earn a total of  400.00  from holding GWILLI FOOD or generate 35.09% return on investment over 90 days.

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

GWILLI FOOD  vs.  CN RAILWAY S

GWILLI FOOD

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

CN RAILWAY S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CN RAILWAY S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CN RAILWAY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GWILLI FOOD and CN RAILWAY

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

The idea behind GWILLI FOOD and CN RAILWAY S 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.