Correlation Between Garuda Construction and Mangalore Chemicals

Can any of the company-specific risk be diversified away by investing in both Garuda Construction and Mangalore Chemicals 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 Mangalore Chemicals 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 Mangalore Chemicals Fertilizers, you can compare the effects of market volatilities on Garuda Construction and Mangalore Chemicals 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 Mangalore Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Construction and Mangalore Chemicals.

Diversification Opportunities for Garuda Construction and Mangalore Chemicals

0.5

Correlation Coefficient

Garuda Construction  Mangalore Chemicals

Very weak diversification

The 3 months correlation between Garuda and Mangalore is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Construction Engineerin and Mangalore Chemicals Fertilizer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangalore Chemicals 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 Mangalore Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangalore Chemicals has no effect on the direction of Garuda Construction i.e., Garuda Construction and Mangalore Chemicals go up and down completely randomly.

Pair Corralation between Garuda Construction and Mangalore Chemicals

Assuming the 90 days trading horizon Garuda Construction Engineering is expected to generate 1.71 times more return on investment than Mangalore Chemicals. However, Garuda Construction is 1.71 times more volatile than Mangalore Chemicals Fertilizers. It trades about 0.06 of its potential returns per unit of risk. Mangalore Chemicals Fertilizers is currently generating about -0.12 per unit of risk. If you would invest  9,433  in Garuda Construction Engineering on December 2, 2024 and sell it today you would earn a total of  1,102  from holding Garuda Construction Engineering or generate 11.68% return on investment over 90 days.

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

Garuda Construction Engineerin  vs.  Mangalore Chemicals Fertilizer

Garuda Construction

Risk-Adjusted Performance

Insignificant

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 uncertain basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Mangalore Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mangalore Chemicals Fertilizers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Garuda Construction and Mangalore Chemicals

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

The idea behind Garuda Construction Engineering and Mangalore Chemicals Fertilizers 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.