Correlation Between Toyota and Grieg Seafood

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

By analyzing existing cross correlation between Toyota Motor Corp and Grieg Seafood, you can compare the effects of market volatilities on Toyota and Grieg Seafood 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 Toyota with a short position of Grieg Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and Grieg Seafood.

Diversification Opportunities for Toyota and Grieg Seafood

0.48

Correlation Coefficient

Toyota  Grieg Seafood

Very weak diversification

The 3 months correlation between Toyota and Grieg is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Grieg Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grieg Seafood and Toyota 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 Toyota Motor Corp are associated (or correlated) with Grieg Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grieg Seafood has no effect on the direction of Toyota i.e., Toyota and Grieg Seafood go up and down completely randomly.

Pair Corralation between Toyota and Grieg Seafood

Assuming the 90 days trading horizon Toyota is expected to generate 2.29 times less return on investment than Grieg Seafood. But when comparing it to its historical volatility, Toyota Motor Corp is 1.14 times less risky than Grieg Seafood. It trades about 0.08 of its potential returns per unit of risk. Grieg Seafood is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,563  in Grieg Seafood on September 12, 2024 and sell it today you would earn a total of  1,132  from holding Grieg Seafood or generate 20.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Toyota Motor Corp  vs.  Grieg Seafood

Toyota Motor Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Toyota Motor Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Toyota may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grieg Seafood

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grieg Seafood unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toyota and Grieg Seafood

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

The idea behind Toyota Motor Corp and Grieg Seafood 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.