Correlation Between Gatron Industries and Ghandhara Automobile

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

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

Diversification Opportunities for Gatron Industries and Ghandhara Automobile

-0.91

Correlation Coefficient

Gatron Industries  Ghandhara Automobile

Pay attention - limited upside

The 3 months correlation between Gatron and Ghandhara is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gatron Industries and Ghandhara Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghandhara Automobile 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 Ghandhara Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghandhara Automobile has no effect on the direction of Gatron Industries i.e., Gatron Industries and Ghandhara Automobile go up and down completely randomly.

Pair Corralation between Gatron Industries and Ghandhara Automobile

Assuming the 90 days trading horizon Gatron Industries is expected to under-perform the Ghandhara Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Gatron Industries is 2.51 times less risky than Ghandhara Automobile. The stock trades about -0.2 of its potential returns per unit of risk. The Ghandhara Automobile is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  25,033  in Ghandhara Automobile on December 2, 2024 and sell it today you would earn a total of  18,314  from holding Ghandhara Automobile or generate 73.16% return on investment over 90 days.

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

Gatron Industries  vs.  Ghandhara Automobile

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.

Ghandhara Automobile

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ghandhara Automobile are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Ghandhara Automobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gatron Industries and Ghandhara Automobile

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

The idea behind Gatron Industries and Ghandhara Automobile 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.