Correlation Between Garuda Construction and DiGiSPICE Technologies

Can any of the company-specific risk be diversified away by investing in both Garuda Construction and DiGiSPICE Technologies 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 Garuda Construction and DiGiSPICE Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garuda Construction Engineering and DiGiSPICE Technologies Limited, you can compare the effects of market volatilities on Garuda Construction and DiGiSPICE Technologies 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 Garuda Construction with a short position of DiGiSPICE Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Construction and DiGiSPICE Technologies.

Diversification Opportunities for Garuda Construction and DiGiSPICE Technologies

0.76

Correlation Coefficient

Garuda Construction  DiGiSPICE Technologies

Poor diversification

The 3 months correlation between Garuda and DiGiSPICE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Construction Engineerin and DiGiSPICE Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiGiSPICE Technologies and Garuda Construction 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 Garuda Construction Engineering are associated (or correlated) with DiGiSPICE Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiGiSPICE Technologies has no effect on the direction of Garuda Construction i.e., Garuda Construction and DiGiSPICE Technologies go up and down completely randomly.

Pair Corralation between Garuda Construction and DiGiSPICE Technologies

Assuming the 90 days trading horizon Garuda Construction Engineering is expected to generate 1.36 times more return on investment than DiGiSPICE Technologies. However, Garuda Construction is 1.36 times more volatile than DiGiSPICE Technologies Limited. It trades about 0.05 of its potential returns per unit of risk. DiGiSPICE Technologies Limited is currently generating about 0.03 per unit of risk. If you would invest  10,636  in Garuda Construction Engineering on September 21, 2024 and sell it today you would earn a total of  773.00  from holding Garuda Construction Engineering or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	9.61%
Values	Daily Returns

Garuda Construction Engineerin  vs.  DiGiSPICE Technologies Limited

Garuda Construction

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

DiGiSPICE Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DiGiSPICE Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward 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 Garuda Construction and DiGiSPICE Technologies

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

The idea behind Garuda Construction Engineering and DiGiSPICE Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.