Correlation Between Gujarat Lease and Diligent Media

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

By analyzing existing cross correlation between Gujarat Lease Financing and Diligent Media, you can compare the effects of market volatilities on Gujarat Lease and Diligent Media 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 Gujarat Lease with a short position of Diligent Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Lease and Diligent Media.

Diversification Opportunities for Gujarat Lease and Diligent Media

0.61

Correlation Coefficient

Gujarat Lease  Diligent Media

Poor diversification

The 3 months correlation between Gujarat and Diligent is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Lease Financing and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media and Gujarat Lease 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 Gujarat Lease Financing are associated (or correlated) with Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of Gujarat Lease i.e., Gujarat Lease and Diligent Media go up and down completely randomly.

Pair Corralation between Gujarat Lease and Diligent Media

Assuming the 90 days trading horizon Gujarat Lease Financing is expected to under-perform the Diligent Media. But the stock apears to be less risky and, when comparing its historical volatility, Gujarat Lease Financing is 1.26 times less risky than Diligent Media. The stock trades about -0.23 of its potential returns per unit of risk. The Diligent Media is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  629.00  in Diligent Media on December 25, 2024 and sell it today you would lose (115.00) from holding Diligent Media or give up 18.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Gujarat Lease Financing  vs.  Diligent Media

Gujarat Lease Financing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gujarat Lease Financing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Diligent Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diligent Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Gujarat Lease and Diligent Media

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

The idea behind Gujarat Lease Financing and Diligent Media 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .