Correlation Between Grocery Outlet and Trio Tech

Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Trio Tech 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 Grocery Outlet and Trio Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grocery Outlet Holding and Trio Tech International, you can compare the effects of market volatilities on Grocery Outlet and Trio Tech 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 Grocery Outlet with a short position of Trio Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Trio Tech.

Diversification Opportunities for Grocery Outlet and Trio Tech

0.53

Correlation Coefficient

Grocery Outlet  Trio Tech

Very weak diversification

The 3 months correlation between Grocery and Trio is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Trio Tech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Tech International and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with Trio Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Tech International has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Trio Tech go up and down completely randomly.

Pair Corralation between Grocery Outlet and Trio Tech

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Trio Tech. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.34 times less risky than Trio Tech. The stock trades about -0.04 of its potential returns per unit of risk. The Trio Tech International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Trio Tech International on October 23, 2024 and sell it today you would earn a total of  66.00  from holding Trio Tech International or generate 12.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Grocery Outlet Holding  vs.  Trio Tech International

Grocery Outlet Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Trio Tech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trio Tech International 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.

Pair Trading with Grocery Outlet and Trio Tech

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

The idea behind Grocery Outlet Holding and Trio Tech International 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.