Correlation Between Gold Circuit and Unitech Printed

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

By analyzing existing cross correlation between Gold Circuit Electronics and Unitech Printed Circuit, you can compare the effects of market volatilities on Gold Circuit and Unitech Printed 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 Gold Circuit with a short position of Unitech Printed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Circuit and Unitech Printed.

Diversification Opportunities for Gold Circuit and Unitech Printed

0.35

Correlation Coefficient

Gold Circuit  Unitech Printed

Weak diversification

The 3 months correlation between Gold and Unitech is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gold Circuit Electronics and Unitech Printed Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Printed Circuit and Gold Circuit 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 Gold Circuit Electronics are associated (or correlated) with Unitech Printed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Printed Circuit has no effect on the direction of Gold Circuit i.e., Gold Circuit and Unitech Printed go up and down completely randomly.

Pair Corralation between Gold Circuit and Unitech Printed

Assuming the 90 days trading horizon Gold Circuit Electronics is expected to generate 1.2 times more return on investment than Unitech Printed. However, Gold Circuit is 1.2 times more volatile than Unitech Printed Circuit. It trades about 0.09 of its potential returns per unit of risk. Unitech Printed Circuit is currently generating about 0.06 per unit of risk. If you would invest  8,580  in Gold Circuit Electronics on September 18, 2024 and sell it today you would earn a total of  15,470  from holding Gold Circuit Electronics or generate 180.3% return on investment over 90 days.

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

Gold Circuit Electronics  vs.  Unitech Printed Circuit

Gold Circuit Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Circuit Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gold Circuit showed solid returns over the last few months and may actually be approaching a breakup point.

Unitech Printed Circuit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unitech Printed Circuit 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.

Pair Trading with Gold Circuit and Unitech Printed

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

The idea behind Gold Circuit Electronics and Unitech Printed Circuit 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.