Correlation Between Gatron Industries and Artistic Denim

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Can any of the company-specific risk be diversified away by investing in both Gatron Industries and Artistic Denim 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 Gatron Industries and Artistic Denim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatron Industries and Artistic Denim Mills, you can compare the effects of market volatilities on Gatron Industries and Artistic Denim 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 Gatron Industries with a short position of Artistic Denim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatron Industries and Artistic Denim.

Diversification Opportunities for Gatron Industries and Artistic Denim

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Gatron and Artistic is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gatron Industries and Artistic Denim Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artistic Denim Mills and Gatron Industries 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 Gatron Industries are associated (or correlated) with Artistic Denim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artistic Denim Mills has no effect on the direction of Gatron Industries i.e., Gatron Industries and Artistic Denim go up and down completely randomly.

Pair Corralation between Gatron Industries and Artistic Denim

Assuming the 90 days trading horizon Gatron Industries is expected to under-perform the Artistic Denim. But the stock apears to be less risky and, when comparing its historical volatility, Gatron Industries is 1.54 times less risky than Artistic Denim. The stock trades about -0.09 of its potential returns per unit of risk. The Artistic Denim Mills is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,830  in Artistic Denim Mills on September 29, 2024 and sell it today you would earn a total of  876.00  from holding Artistic Denim Mills or generate 22.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Gatron Industries  vs.  Artistic Denim Mills

 Performance 
       Timeline  
Gatron Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gatron Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Artistic Denim Mills 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Artistic Denim Mills are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Artistic Denim sustained solid returns over the last few months and may actually be approaching a breakup point.

Gatron Industries and Artistic Denim Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gatron Industries and Artistic Denim

The main advantage of trading using opposite Gatron Industries and Artistic Denim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatron Industries position performs unexpectedly, Artistic Denim 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 Artistic Denim will offset losses from the drop in Artistic Denim's long position.
The idea behind Gatron Industries and Artistic Denim Mills 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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