Correlation Between Generic Engineering and Coffee Day

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

By analyzing existing cross correlation between Generic Engineering Construction and Coffee Day Enterprises, you can compare the effects of market volatilities on Generic Engineering and Coffee Day 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 Generic Engineering with a short position of Coffee Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Engineering and Coffee Day.

Diversification Opportunities for Generic Engineering and Coffee Day

0.59

Correlation Coefficient

Generic Engineering  Coffee Day

Very weak diversification

The 3 months correlation between Generic and Coffee is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and Coffee Day Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Day Enterprises and Generic Engineering 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 Generic Engineering Construction are associated (or correlated) with Coffee Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Day Enterprises has no effect on the direction of Generic Engineering i.e., Generic Engineering and Coffee Day go up and down completely randomly.

Pair Corralation between Generic Engineering and Coffee Day

Assuming the 90 days trading horizon Generic Engineering is expected to generate 1.36 times less return on investment than Coffee Day. In addition to that, Generic Engineering is 1.06 times more volatile than Coffee Day Enterprises. It trades about 0.09 of its total potential returns per unit of risk. Coffee Day Enterprises is currently generating about 0.13 per unit of volatility. If you would invest  2,962  in Coffee Day Enterprises on April 24, 2025 and sell it today you would earn a total of  830.00  from holding Coffee Day Enterprises or generate 28.02% return on investment over 90 days.

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

Generic Engineering Constructi  vs.  Coffee Day Enterprises

Generic Engineering

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Engineering Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Generic Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Coffee Day Enterprises

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Day Enterprises are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Coffee Day exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generic Engineering and Coffee Day

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

The idea behind Generic Engineering Construction and Coffee Day Enterprises 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.