Correlation Between Electrosteel Castings and Ganesh HousingLimited

Can any of the company-specific risk be diversified away by investing in both Electrosteel Castings and Ganesh HousingLimited 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 Electrosteel Castings and Ganesh HousingLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electrosteel Castings Limited and Ganesh Housing, you can compare the effects of market volatilities on Electrosteel Castings and Ganesh HousingLimited 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 Electrosteel Castings with a short position of Ganesh HousingLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrosteel Castings and Ganesh HousingLimited.

Diversification Opportunities for Electrosteel Castings and Ganesh HousingLimited

0.58

Correlation Coefficient

Electrosteel Castings  Ganesh HousingLimited

Very weak diversification

The 3 months correlation between Electrosteel and Ganesh is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Electrosteel Castings Limited and Ganesh Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganesh HousingLimited and Electrosteel Castings 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 Electrosteel Castings Limited are associated (or correlated) with Ganesh HousingLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganesh HousingLimited has no effect on the direction of Electrosteel Castings i.e., Electrosteel Castings and Ganesh HousingLimited go up and down completely randomly.

Pair Corralation between Electrosteel Castings and Ganesh HousingLimited

Assuming the 90 days trading horizon Electrosteel Castings Limited is expected to under-perform the Ganesh HousingLimited. But the stock apears to be less risky and, when comparing its historical volatility, Electrosteel Castings Limited is 1.04 times less risky than Ganesh HousingLimited. The stock trades about -0.14 of its potential returns per unit of risk. The Ganesh Housing is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  123,140  in Ganesh Housing on December 30, 2024 and sell it today you would lose (17,225) from holding Ganesh Housing or give up 13.99% of portfolio value over 90 days.

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

Electrosteel Castings Limited  vs.  Ganesh Housing

Electrosteel Castings

Risk-Adjusted Performance

Very Weak

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

Ganesh HousingLimited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ganesh Housing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Electrosteel Castings and Ganesh HousingLimited

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

The idea behind Electrosteel Castings Limited and Ganesh Housing 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.