Correlation Between Gangotri Textiles and Coromandel International

Can any of the company-specific risk be diversified away by investing in both Gangotri Textiles and Coromandel International 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 Gangotri Textiles and Coromandel International into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Gangotri Textiles and Coromandel International

-0.38

Correlation Coefficient

Gangotri Textiles  Coromandel International

Very good diversification

The 3 months correlation between Gangotri and Coromandel is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gangotri Textiles Limited and Coromandel International Limit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coromandel International and Gangotri Textiles 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 Gangotri Textiles Limited are associated (or correlated) with Coromandel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coromandel International has no effect on the direction of Gangotri Textiles i.e., Gangotri Textiles and Coromandel International go up and down completely randomly.

Pair Corralation between Gangotri Textiles and Coromandel International

Assuming the 90 days trading horizon Gangotri Textiles Limited is expected to under-perform the Coromandel International. In addition to that, Gangotri Textiles is 1.28 times more volatile than Coromandel International Limited. It trades about -0.03 of its total potential returns per unit of risk. Coromandel International Limited is currently generating about 0.24 per unit of volatility. If you would invest  156,625  in Coromandel International Limited on October 7, 2024 and sell it today you would earn a total of  39,205  from holding Coromandel International Limited or generate 25.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Gangotri Textiles Limited  vs.  Coromandel International Limit

Gangotri Textiles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gangotri Textiles Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Gangotri Textiles is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Coromandel International

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coromandel International Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Coromandel International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gangotri Textiles and Coromandel International

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

The idea behind Gangotri Textiles Limited and Coromandel International 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.