Correlation Between Gatron Industries and Mari Petroleum

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

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

Diversification Opportunities for Gatron Industries and Mari Petroleum

-0.11

Correlation Coefficient

Gatron Industries  Mari Petroleum

Good diversification

The 3 months correlation between Gatron and Mari is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gatron Industries and Mari Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mari Petroleum 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 Mari Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mari Petroleum has no effect on the direction of Gatron Industries i.e., Gatron Industries and Mari Petroleum go up and down completely randomly.

Pair Corralation between Gatron Industries and Mari Petroleum

Assuming the 90 days trading horizon Gatron Industries is expected to under-perform the Mari Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Gatron Industries is 3.28 times less risky than Mari Petroleum. The stock trades about -0.09 of its potential returns per unit of risk. The Mari Petroleum is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  18,862  in Mari Petroleum on September 29, 2024 and sell it today you would earn a total of  50,123  from holding Mari Petroleum or generate 265.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Gatron Industries  vs.  Mari Petroleum

Gatron Industries

Risk-Adjusted Performance

0 of 100

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.

Mari Petroleum

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mari Petroleum are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mari Petroleum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gatron Industries and Mari Petroleum

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

The idea behind Gatron Industries and Mari Petroleum 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.