Correlation Between Gatron Industries and Fateh Sports

Can any of the company-specific risk be diversified away by investing in both Gatron Industries and Fateh Sports 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 Fateh Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gatron Industries and Fateh Sports Wear, you can compare the effects of market volatilities on Gatron Industries and Fateh Sports 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 Fateh Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatron Industries and Fateh Sports.

Diversification Opportunities for Gatron Industries and Fateh Sports

0.64

Correlation Coefficient

Gatron Industries  Fateh Sports

Poor diversification

The 3 months correlation between Gatron and Fateh is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gatron Industries and Fateh Sports Wear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fateh Sports Wear 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 Fateh Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fateh Sports Wear has no effect on the direction of Gatron Industries i.e., Gatron Industries and Fateh Sports go up and down completely randomly.

Pair Corralation between Gatron Industries and Fateh Sports

Assuming the 90 days trading horizon Gatron Industries is expected to under-perform the Fateh Sports. But the stock apears to be less risky and, when comparing its historical volatility, Gatron Industries is 2.75 times less risky than Fateh Sports. The stock trades about -0.25 of its potential returns per unit of risk. The Fateh Sports Wear is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  8,722  in Fateh Sports Wear on December 30, 2024 and sell it today you would lose (929.00) from holding Fateh Sports Wear or give up 10.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	34.92%
Values	Daily Returns

Gatron Industries  vs.  Fateh Sports Wear

Gatron Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gatron Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fateh Sports Wear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fateh Sports Wear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gatron Industries and Fateh Sports

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

The idea behind Gatron Industries and Fateh Sports Wear 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.