Correlation Between GM and Radico Khaitan
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By analyzing existing cross correlation between General Motors and Radico Khaitan Limited, you can compare the effects of market volatilities on GM and Radico Khaitan 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 GM with a short position of Radico Khaitan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Radico Khaitan.
Diversification Opportunities for GM and Radico Khaitan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Radico is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Radico Khaitan Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radico Khaitan and GM 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 General Motors are associated (or correlated) with Radico Khaitan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radico Khaitan has no effect on the direction of GM i.e., GM and Radico Khaitan go up and down completely randomly.
Pair Corralation between GM and Radico Khaitan
Allowing for the 90-day total investment horizon GM is expected to generate 1.5 times less return on investment than Radico Khaitan. In addition to that, GM is 1.14 times more volatile than Radico Khaitan Limited. It trades about 0.08 of its total potential returns per unit of risk. Radico Khaitan Limited is currently generating about 0.14 per unit of volatility. If you would invest 200,000 in Radico Khaitan Limited on September 5, 2024 and sell it today you would earn a total of 38,455 from holding Radico Khaitan Limited or generate 19.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 96.88% |
Values | Daily Returns |
General Motors vs. Radico Khaitan Limited
Performance |
Timeline |
General Motors |
Radico Khaitan |
GM and Radico Khaitan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Radico Khaitan
The main advantage of trading using opposite GM and Radico Khaitan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Radico Khaitan 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 Radico Khaitan will offset losses from the drop in Radico Khaitan's long position.The idea behind General Motors and Radico Khaitan Limited 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.Radico Khaitan vs. Gangotri Textiles Limited | Radico Khaitan vs. Hemisphere Properties India | Radico Khaitan vs. Kingfa Science Technology | Radico Khaitan vs. Rico Auto Industries |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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