Correlation Between GWILLI FOOD and TRAVEL LEISURE

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

By analyzing existing cross correlation between GWILLI FOOD and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on GWILLI FOOD and TRAVEL LEISURE 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 TRAVEL LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GWILLI FOOD and TRAVEL LEISURE.

Diversification Opportunities for GWILLI FOOD and TRAVEL LEISURE

0.61

Correlation Coefficient

GWILLI FOOD  TRAVEL LEISURE

Poor diversification

The 3 months correlation between GWILLI and TRAVEL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GWILLI FOOD and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of GWILLI FOOD i.e., GWILLI FOOD and TRAVEL LEISURE go up and down completely randomly.

Pair Corralation between GWILLI FOOD and TRAVEL LEISURE

Assuming the 90 days trading horizon GWILLI FOOD is expected to generate 2.13 times more return on investment than TRAVEL LEISURE. However, GWILLI FOOD is 2.13 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.18 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.18 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	Significant
Accuracy	100.0%
Values	Daily Returns

GWILLI FOOD  vs.  TRAVEL LEISURE DL 01

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.

TRAVEL LEISURE DL

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TRAVEL LEISURE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GWILLI FOOD and TRAVEL LEISURE

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

The idea behind GWILLI FOOD and TRAVEL LEISURE DL 01 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.