Correlation Between Macmahon Holdings and Greystone Logistics

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

By analyzing existing cross correlation between Macmahon Holdings Limited and Greystone Logistics, you can compare the effects of market volatilities on Macmahon Holdings and Greystone Logistics 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 Macmahon Holdings with a short position of Greystone Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macmahon Holdings and Greystone Logistics.

Diversification Opportunities for Macmahon Holdings and Greystone Logistics

0.19

Correlation Coefficient

Macmahon Holdings  Greystone Logistics

Average diversification

The 3 months correlation between Macmahon and Greystone is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited and Greystone Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greystone Logistics and Macmahon Holdings 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 Macmahon Holdings Limited are associated (or correlated) with Greystone Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greystone Logistics has no effect on the direction of Macmahon Holdings i.e., Macmahon Holdings and Greystone Logistics go up and down completely randomly.

Pair Corralation between Macmahon Holdings and Greystone Logistics

Assuming the 90 days horizon Macmahon Holdings Limited is expected to under-perform the Greystone Logistics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Macmahon Holdings Limited is 1.05 times less risky than Greystone Logistics. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Greystone Logistics is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  98.00  in Greystone Logistics on October 7, 2024 and sell it today you would earn a total of  10.00  from holding Greystone Logistics or generate 10.2% return on investment over 90 days.

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

Macmahon Holdings Limited  vs.  Greystone Logistics

Macmahon Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macmahon Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Greystone Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greystone Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Macmahon Holdings and Greystone Logistics

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

The idea behind Macmahon Holdings Limited and Greystone Logistics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.