Correlation Between General Commercial and Logismos Information

Can any of the company-specific risk be diversified away by investing in both General Commercial and Logismos Information 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 General Commercial and Logismos Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Commercial Industrial and Logismos Information Systems, you can compare the effects of market volatilities on General Commercial and Logismos Information 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 General Commercial with a short position of Logismos Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Commercial and Logismos Information.

Diversification Opportunities for General Commercial and Logismos Information

0.65

Correlation Coefficient

General Commercial  Logismos Information

Poor diversification

The 3 months correlation between General and Logismos is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding General Commercial Industrial and Logismos Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logismos Information and General Commercial 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 General Commercial Industrial are associated (or correlated) with Logismos Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logismos Information has no effect on the direction of General Commercial i.e., General Commercial and Logismos Information go up and down completely randomly.

Pair Corralation between General Commercial and Logismos Information

Assuming the 90 days trading horizon General Commercial is expected to generate 1.33 times less return on investment than Logismos Information. In addition to that, General Commercial is 1.51 times more volatile than Logismos Information Systems. It trades about 0.03 of its total potential returns per unit of risk. Logismos Information Systems is currently generating about 0.06 per unit of volatility. If you would invest  107.00  in Logismos Information Systems on October 10, 2024 and sell it today you would earn a total of  52.00  from holding Logismos Information Systems or generate 48.6% return on investment over 90 days.

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

General Commercial Industrial  vs.  Logismos Information Systems

General Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Logismos Information

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Logismos Information Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Logismos Information displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Commercial and Logismos Information

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

The idea behind General Commercial Industrial and Logismos Information Systems 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.