Correlation Between GDI Integrated and Dorel Industries

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Can any of the company-specific risk be diversified away by investing in both GDI Integrated and Dorel Industries 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 GDI Integrated and Dorel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GDI Integrated and Dorel Industries, you can compare the effects of market volatilities on GDI Integrated and Dorel Industries 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 GDI Integrated with a short position of Dorel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDI Integrated and Dorel Industries.

Diversification Opportunities for GDI Integrated and Dorel Industries

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between GDI and Dorel is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and Dorel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorel Industries and GDI Integrated 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 GDI Integrated are associated (or correlated) with Dorel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorel Industries has no effect on the direction of GDI Integrated i.e., GDI Integrated and Dorel Industries go up and down completely randomly.

Pair Corralation between GDI Integrated and Dorel Industries

Assuming the 90 days trading horizon GDI Integrated is expected to generate 0.6 times more return on investment than Dorel Industries. However, GDI Integrated is 1.67 times less risky than Dorel Industries. It trades about 0.06 of its potential returns per unit of risk. Dorel Industries is currently generating about -0.07 per unit of risk. If you would invest  3,160  in GDI Integrated on October 13, 2024 and sell it today you would earn a total of  470.00  from holding GDI Integrated or generate 14.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GDI Integrated  vs.  Dorel Industries

 Performance 
       Timeline  
GDI Integrated 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GDI Integrated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, GDI Integrated is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Dorel Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dorel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GDI Integrated and Dorel Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GDI Integrated and Dorel Industries

The main advantage of trading using opposite GDI Integrated and Dorel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDI Integrated position performs unexpectedly, Dorel Industries 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 Dorel Industries will offset losses from the drop in Dorel Industries' long position.
The idea behind GDI Integrated and Dorel Industries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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