Correlation Between Gatron Industries and Packages

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

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

Diversification Opportunities for Gatron Industries and Packages

-0.38

Correlation Coefficient

Gatron Industries  Packages

Very good diversification

The 3 months correlation between Gatron and Packages is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gatron Industries and Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packages 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 Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packages has no effect on the direction of Gatron Industries i.e., Gatron Industries and Packages go up and down completely randomly.

Pair Corralation between Gatron Industries and Packages

Assuming the 90 days trading horizon Gatron Industries is expected to under-perform the Packages. In addition to that, Gatron Industries is 1.36 times more volatile than Packages. It trades about -0.01 of its total potential returns per unit of risk. Packages is currently generating about 0.09 per unit of volatility. If you would invest  36,321  in Packages on September 12, 2024 and sell it today you would earn a total of  27,362  from holding Packages or generate 75.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.28%
Values	Daily Returns

Gatron Industries  vs.  Packages

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 somewhat strong basic indicators, Gatron Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Packages

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Packages are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Packages sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gatron Industries and Packages

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

The idea behind Gatron Industries and Packages 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.