Correlation Between Grand Investment and Iron

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

By analyzing existing cross correlation between Grand Investment Capital and Iron And Steel, you can compare the effects of market volatilities on Grand Investment and Iron 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 Grand Investment with a short position of Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Investment and Iron.

Diversification Opportunities for Grand Investment and Iron

0.22

Correlation Coefficient

Grand Investment  Iron

Modest diversification

The 3 months correlation between Grand and Iron is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Grand Investment Capital and Iron And Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron And Steel and Grand Investment 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 Grand Investment Capital are associated (or correlated) with Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron And Steel has no effect on the direction of Grand Investment i.e., Grand Investment and Iron go up and down completely randomly.

Pair Corralation between Grand Investment and Iron

Assuming the 90 days trading horizon Grand Investment is expected to generate 1.51 times less return on investment than Iron. But when comparing it to its historical volatility, Grand Investment Capital is 2.11 times less risky than Iron. It trades about 0.2 of its potential returns per unit of risk. Iron And Steel is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  407.00  in Iron And Steel on December 22, 2024 and sell it today you would earn a total of  175.00  from holding Iron And Steel or generate 43.0% return on investment over 90 days.

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

Grand Investment Capital  vs.  Iron And Steel

Grand Investment Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Investment Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Grand Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Iron And Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iron And Steel are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grand Investment and Iron

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

The idea behind Grand Investment Capital and Iron And Steel 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.