Correlation Between Ankit Metal and Gujarat Alkalies

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

By analyzing existing cross correlation between Ankit Metal Power and Gujarat Alkalies and, you can compare the effects of market volatilities on Ankit Metal and Gujarat Alkalies 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 Ankit Metal with a short position of Gujarat Alkalies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ankit Metal and Gujarat Alkalies.

Diversification Opportunities for Ankit Metal and Gujarat Alkalies

-0.56

Correlation Coefficient

Ankit Metal  Gujarat Alkalies

Excellent diversification

The 3 months correlation between Ankit and Gujarat is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ankit Metal Power and Gujarat Alkalies and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Alkalies and Ankit Metal 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 Ankit Metal Power are associated (or correlated) with Gujarat Alkalies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Alkalies has no effect on the direction of Ankit Metal i.e., Ankit Metal and Gujarat Alkalies go up and down completely randomly.

Pair Corralation between Ankit Metal and Gujarat Alkalies

Assuming the 90 days trading horizon Ankit Metal Power is expected to generate 1.89 times more return on investment than Gujarat Alkalies. However, Ankit Metal is 1.89 times more volatile than Gujarat Alkalies and. It trades about 0.02 of its potential returns per unit of risk. Gujarat Alkalies and is currently generating about -0.13 per unit of risk. If you would invest  391.00  in Ankit Metal Power on October 24, 2024 and sell it today you would earn a total of  4.00  from holding Ankit Metal Power or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Ankit Metal Power  vs.  Gujarat Alkalies and

Ankit Metal Power

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ankit Metal Power are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ankit Metal is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gujarat Alkalies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gujarat Alkalies and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ankit Metal and Gujarat Alkalies

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

The idea behind Ankit Metal Power and Gujarat Alkalies and 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..