Correlation Between Gillette India and MAS Financial

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

By analyzing existing cross correlation between Gillette India Limited and MAS Financial Services, you can compare the effects of market volatilities on Gillette India and MAS Financial 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 Gillette India with a short position of MAS Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gillette India and MAS Financial.

Diversification Opportunities for Gillette India and MAS Financial

-0.17

Correlation Coefficient

Gillette India  MAS Financial

Good diversification

The 3 months correlation between Gillette and MAS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Gillette India Limited and MAS Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAS Financial Services and Gillette India 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 Gillette India Limited are associated (or correlated) with MAS Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAS Financial Services has no effect on the direction of Gillette India i.e., Gillette India and MAS Financial go up and down completely randomly.

Pair Corralation between Gillette India and MAS Financial

Assuming the 90 days trading horizon Gillette India Limited is expected to generate 1.25 times more return on investment than MAS Financial. However, Gillette India is 1.25 times more volatile than MAS Financial Services. It trades about 0.09 of its potential returns per unit of risk. MAS Financial Services is currently generating about -0.07 per unit of risk. If you would invest  641,954  in Gillette India Limited on October 22, 2024 and sell it today you would earn a total of  297,941  from holding Gillette India Limited or generate 46.41% return on investment over 90 days.

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

Gillette India Limited  vs.  MAS Financial Services

Gillette India

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gillette India Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gillette India unveiled solid returns over the last few months and may actually be approaching a breakup point.

MAS Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gillette India and MAS Financial

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

The idea behind Gillette India Limited and MAS Financial Services 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.