Correlation Between Agro Tech and Gokul Refoils

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

By analyzing existing cross correlation between Agro Tech Foods and Gokul Refoils and, you can compare the effects of market volatilities on Agro Tech and Gokul Refoils 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 Agro Tech with a short position of Gokul Refoils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Gokul Refoils.

Diversification Opportunities for Agro Tech and Gokul Refoils

0.85

Correlation Coefficient

Agro Tech  Gokul Refoils

Very poor diversification

The 3 months correlation between Agro and Gokul is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and Gokul Refoils and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gokul Refoils and Agro Tech 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 Agro Tech Foods are associated (or correlated) with Gokul Refoils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gokul Refoils has no effect on the direction of Agro Tech i.e., Agro Tech and Gokul Refoils go up and down completely randomly.

Pair Corralation between Agro Tech and Gokul Refoils

Assuming the 90 days trading horizon Agro Tech Foods is expected to generate 0.7 times more return on investment than Gokul Refoils. However, Agro Tech Foods is 1.43 times less risky than Gokul Refoils. It trades about -0.08 of its potential returns per unit of risk. Gokul Refoils and is currently generating about -0.14 per unit of risk. If you would invest  89,585  in Agro Tech Foods on December 23, 2024 and sell it today you would lose (8,530) from holding Agro Tech Foods or give up 9.52% of portfolio value over 90 days.

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

Agro Tech Foods  vs.  Gokul Refoils and

Agro Tech Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agro Tech Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Gokul Refoils

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gokul Refoils and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Agro Tech and Gokul Refoils

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

The idea behind Agro Tech Foods and Gokul Refoils 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..