Correlation Between GM Breweries and Sintex Plastics

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

By analyzing existing cross correlation between GM Breweries Limited and Sintex Plastics Technology, you can compare the effects of market volatilities on GM Breweries and Sintex Plastics 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 Breweries with a short position of Sintex Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM Breweries and Sintex Plastics.

Diversification Opportunities for GM Breweries and Sintex Plastics

0.0

Correlation Coefficient

GM Breweries  Sintex Plastics

Pay attention - limited upside

The 3 months correlation between GMBREW and Sintex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GM Breweries Limited and Sintex Plastics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sintex Plastics Tech and GM Breweries 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 GM Breweries Limited are associated (or correlated) with Sintex Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sintex Plastics Tech has no effect on the direction of GM Breweries i.e., GM Breweries and Sintex Plastics go up and down completely randomly.

Pair Corralation between GM Breweries and Sintex Plastics

If you would invest  75,895  in GM Breweries Limited on September 20, 2024 and sell it today you would earn a total of  9,095  from holding GM Breweries Limited or generate 11.98% return on investment over 90 days.

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

GM Breweries Limited  vs.  Sintex Plastics Technology

GM Breweries Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GM Breweries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GM Breweries is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Sintex Plastics Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sintex Plastics Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sintex Plastics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GM Breweries and Sintex Plastics

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

The idea behind GM Breweries Limited and Sintex Plastics 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.