Correlation Between Gadwa For and Edita Food

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

By analyzing existing cross correlation between Gadwa For Industrial and Edita Food Industries, you can compare the effects of market volatilities on Gadwa For and Edita Food 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 Gadwa For with a short position of Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gadwa For and Edita Food.

Diversification Opportunities for Gadwa For and Edita Food

0.05

Correlation Coefficient

Gadwa For  Edita Food

Significant diversification

The 3 months correlation between Gadwa and Edita is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gadwa For Industrial and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries and Gadwa For 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 Gadwa For Industrial are associated (or correlated) with Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Gadwa For i.e., Gadwa For and Edita Food go up and down completely randomly.

Pair Corralation between Gadwa For and Edita Food

Assuming the 90 days trading horizon Gadwa For Industrial is expected to generate 2.13 times more return on investment than Edita Food. However, Gadwa For is 2.13 times more volatile than Edita Food Industries. It trades about 0.24 of its potential returns per unit of risk. Edita Food Industries is currently generating about 0.02 per unit of risk. If you would invest  421.00  in Gadwa For Industrial on December 23, 2024 and sell it today you would earn a total of  179.00  from holding Gadwa For Industrial or generate 42.52% return on investment over 90 days.

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

Gadwa For Industrial  vs.  Edita Food Industries

Gadwa For Industrial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gadwa For Industrial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Gadwa For reported solid returns over the last few months and may actually be approaching a breakup point.

Edita Food Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edita Food Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Edita Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gadwa For and Edita Food

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

The idea behind Gadwa For Industrial and Edita Food 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.