Correlation Between Gujarat Lease and Syrma SGS

Can any of the company-specific risk be diversified away by investing in both Gujarat Lease and Syrma SGS 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 Syrma SGS 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 Syrma SGS Technology, you can compare the effects of market volatilities on Gujarat Lease and Syrma SGS 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 Syrma SGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Lease and Syrma SGS.

Diversification Opportunities for Gujarat Lease and Syrma SGS

0.71

Correlation Coefficient

Gujarat Lease  Syrma SGS

Poor diversification

The 3 months correlation between Gujarat and Syrma is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Lease Financing and Syrma SGS Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syrma SGS Technology 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 Syrma SGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syrma SGS Technology has no effect on the direction of Gujarat Lease i.e., Gujarat Lease and Syrma SGS go up and down completely randomly.

Pair Corralation between Gujarat Lease and Syrma SGS

Assuming the 90 days trading horizon Gujarat Lease Financing is expected to under-perform the Syrma SGS. But the stock apears to be less risky and, when comparing its historical volatility, Gujarat Lease Financing is 1.31 times less risky than Syrma SGS. The stock trades about -0.29 of its potential returns per unit of risk. The Syrma SGS Technology is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  60,625  in Syrma SGS Technology on December 23, 2024 and sell it today you would lose (13,735) from holding Syrma SGS Technology or give up 22.66% of portfolio value over 90 days.

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

Gujarat Lease Financing  vs.  Syrma SGS Technology

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 unsteady 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.

Syrma SGS Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Syrma SGS Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gujarat Lease and Syrma SGS

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

The idea behind Gujarat Lease Financing and Syrma SGS Technology 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.