Correlation Between Gujarat Fluorochemicals and GPT Healthcare

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

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

Diversification Opportunities for Gujarat Fluorochemicals and GPT Healthcare

0.31

Correlation Coefficient

Gujarat Fluorochemicals  GPT Healthcare

Weak diversification

The 3 months correlation between Gujarat and GPT is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Fluorochemicals Limite and GPT Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Healthcare and Gujarat Fluorochemicals 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 Gujarat Fluorochemicals Limited are associated (or correlated) with GPT Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Healthcare has no effect on the direction of Gujarat Fluorochemicals i.e., Gujarat Fluorochemicals and GPT Healthcare go up and down completely randomly.

Pair Corralation between Gujarat Fluorochemicals and GPT Healthcare

Assuming the 90 days trading horizon Gujarat Fluorochemicals Limited is expected to generate 0.84 times more return on investment than GPT Healthcare. However, Gujarat Fluorochemicals Limited is 1.2 times less risky than GPT Healthcare. It trades about 0.06 of its potential returns per unit of risk. GPT Healthcare is currently generating about 0.0 per unit of risk. If you would invest  269,184  in Gujarat Fluorochemicals Limited on October 4, 2024 and sell it today you would earn a total of  147,376  from holding Gujarat Fluorochemicals Limited or generate 54.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.42%
Values	Daily Returns

Gujarat Fluorochemicals Limite  vs.  GPT Healthcare

Gujarat Fluorochemicals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gujarat Fluorochemicals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Gujarat Fluorochemicals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

GPT Healthcare

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GPT Healthcare are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gujarat Fluorochemicals and GPT Healthcare

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

The idea behind Gujarat Fluorochemicals Limited and GPT Healthcare 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.