Correlation Between GrandTech and Sentronic International

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

By analyzing existing cross correlation between GrandTech CG Systems and Sentronic International, you can compare the effects of market volatilities on GrandTech and Sentronic International 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 GrandTech with a short position of Sentronic International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GrandTech and Sentronic International.

Diversification Opportunities for GrandTech and Sentronic International

0.71

Correlation Coefficient

GrandTech  Sentronic International

Poor diversification

The 3 months correlation between GrandTech and Sentronic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GrandTech CG Systems and Sentronic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentronic International and GrandTech 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 GrandTech CG Systems are associated (or correlated) with Sentronic International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentronic International has no effect on the direction of GrandTech i.e., GrandTech and Sentronic International go up and down completely randomly.

Pair Corralation between GrandTech and Sentronic International

Assuming the 90 days trading horizon GrandTech CG Systems is expected to generate 0.39 times more return on investment than Sentronic International. However, GrandTech CG Systems is 2.56 times less risky than Sentronic International. It trades about -0.14 of its potential returns per unit of risk. Sentronic International is currently generating about -0.1 per unit of risk. If you would invest  6,090  in GrandTech CG Systems on September 20, 2024 and sell it today you would lose (460.00) from holding GrandTech CG Systems or give up 7.55% of portfolio value over 90 days.

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

GrandTech CG Systems  vs.  Sentronic International

GrandTech CG Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GrandTech CG Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Sentronic International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentronic International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with GrandTech and Sentronic International

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

The idea behind GrandTech CG Systems and Sentronic 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.