Correlation Between AUTHUM INVESTMENT and Golden Tobacco

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

By analyzing existing cross correlation between AUTHUM INVESTMENT INFRASTRUCTU and Golden Tobacco Limited, you can compare the effects of market volatilities on AUTHUM INVESTMENT and Golden Tobacco 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 AUTHUM INVESTMENT with a short position of Golden Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTHUM INVESTMENT and Golden Tobacco.

Diversification Opportunities for AUTHUM INVESTMENT and Golden Tobacco

0.33

Correlation Coefficient

AUTHUM INVESTMENT  Golden Tobacco

Weak diversification

The 3 months correlation between AUTHUM and Golden is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AUTHUM INVESTMENT INFRASTRUCTU and Golden Tobacco Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Tobacco and AUTHUM INVESTMENT 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 AUTHUM INVESTMENT INFRASTRUCTU are associated (or correlated) with Golden Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Tobacco has no effect on the direction of AUTHUM INVESTMENT i.e., AUTHUM INVESTMENT and Golden Tobacco go up and down completely randomly.

Pair Corralation between AUTHUM INVESTMENT and Golden Tobacco

Assuming the 90 days trading horizon AUTHUM INVESTMENT INFRASTRUCTU is expected to generate 1.16 times more return on investment than Golden Tobacco. However, AUTHUM INVESTMENT is 1.16 times more volatile than Golden Tobacco Limited. It trades about 0.07 of its potential returns per unit of risk. Golden Tobacco Limited is currently generating about 0.01 per unit of risk. If you would invest  168,165  in AUTHUM INVESTMENT INFRASTRUCTU on September 13, 2024 and sell it today you would earn a total of  16,610  from holding AUTHUM INVESTMENT INFRASTRUCTU or generate 9.88% return on investment over 90 days.

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

AUTHUM INVESTMENT INFRASTRUCTU  vs.  Golden Tobacco Limited

AUTHUM INVESTMENT

Risk-Adjusted Performance

5 of 100

Modest

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

Golden Tobacco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Tobacco Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Golden Tobacco is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AUTHUM INVESTMENT and Golden Tobacco

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

The idea behind AUTHUM INVESTMENT INFRASTRUCTU and Golden Tobacco Limited 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.