Correlation Between DN TYRE and GUARANTY TRUST

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

By analyzing existing cross correlation between DN TYRE RUBBER and GUARANTY TRUST HOLDING, you can compare the effects of market volatilities on DN TYRE and GUARANTY TRUST 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 DN TYRE with a short position of GUARANTY TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of DN TYRE and GUARANTY TRUST.

Diversification Opportunities for DN TYRE and GUARANTY TRUST

0.0

Correlation Coefficient

DN TYRE  GUARANTY TRUST

Pay attention - limited upside

The 3 months correlation between DUNLOP and GUARANTY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DN TYRE RUBBER and GUARANTY TRUST HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUARANTY TRUST HOLDING and DN TYRE 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 DN TYRE RUBBER are associated (or correlated) with GUARANTY TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUARANTY TRUST HOLDING has no effect on the direction of DN TYRE i.e., DN TYRE and GUARANTY TRUST go up and down completely randomly.

Pair Corralation between DN TYRE and GUARANTY TRUST

If you would invest  5,200  in GUARANTY TRUST HOLDING on October 17, 2024 and sell it today you would earn a total of  600.00  from holding GUARANTY TRUST HOLDING or generate 11.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

DN TYRE RUBBER  vs.  GUARANTY TRUST HOLDING

DN TYRE RUBBER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DN TYRE RUBBER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DN TYRE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

GUARANTY TRUST HOLDING

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GUARANTY TRUST HOLDING are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, GUARANTY TRUST displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DN TYRE and GUARANTY TRUST

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

The idea behind DN TYRE RUBBER and GUARANTY TRUST HOLDING 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.