Correlation Between ID Logistics and GEA Grenobl

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

By analyzing existing cross correlation between ID Logistics Group and GEA Grenobl Elect, you can compare the effects of market volatilities on ID Logistics and GEA Grenobl 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 ID Logistics with a short position of GEA Grenobl. Check out your portfolio center. Please also check ongoing floating volatility patterns of ID Logistics and GEA Grenobl.

Diversification Opportunities for ID Logistics and GEA Grenobl

0.42

Correlation Coefficient

ID Logistics  GEA Grenobl

Very weak diversification

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

Pair Corralation between ID Logistics and GEA Grenobl

Assuming the 90 days trading horizon ID Logistics is expected to generate 118.73 times less return on investment than GEA Grenobl. But when comparing it to its historical volatility, ID Logistics Group is 1.28 times less risky than GEA Grenobl. It trades about 0.0 of its potential returns per unit of risk. GEA Grenobl Elect is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,500  in GEA Grenobl Elect on December 27, 2024 and sell it today you would earn a total of  1,250  from holding GEA Grenobl Elect or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

ID Logistics Group  vs.  GEA Grenobl Elect

ID Logistics Group

Risk-Adjusted Performance

Very Weak

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

GEA Grenobl Elect

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEA Grenobl Elect are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GEA Grenobl sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ID Logistics and GEA Grenobl

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

The idea behind ID Logistics Group and GEA Grenobl Elect 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.