Correlation Between Gokul Refoils and Maharashtra Scooters

Can any of the company-specific risk be diversified away by investing in both Gokul Refoils and Maharashtra Scooters 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 Gokul Refoils and Maharashtra Scooters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gokul Refoils and and Maharashtra Scooters Limited, you can compare the effects of market volatilities on Gokul Refoils and Maharashtra Scooters 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 Gokul Refoils with a short position of Maharashtra Scooters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gokul Refoils and Maharashtra Scooters.

Diversification Opportunities for Gokul Refoils and Maharashtra Scooters

0.5

Correlation Coefficient

Gokul Refoils  Maharashtra Scooters

Very weak diversification

The 3 months correlation between Gokul and Maharashtra is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gokul Refoils and and Maharashtra Scooters Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maharashtra Scooters and Gokul Refoils 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 Gokul Refoils and are associated (or correlated) with Maharashtra Scooters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maharashtra Scooters has no effect on the direction of Gokul Refoils i.e., Gokul Refoils and Maharashtra Scooters go up and down completely randomly.

Pair Corralation between Gokul Refoils and Maharashtra Scooters

Assuming the 90 days trading horizon Gokul Refoils and is expected to under-perform the Maharashtra Scooters. In addition to that, Gokul Refoils is 1.86 times more volatile than Maharashtra Scooters Limited. It trades about -0.09 of its total potential returns per unit of risk. Maharashtra Scooters Limited is currently generating about -0.03 per unit of volatility. If you would invest  950,040  in Maharashtra Scooters Limited on December 3, 2024 and sell it today you would lose (26,685) from holding Maharashtra Scooters Limited or give up 2.81% of portfolio value over 90 days.

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

Gokul Refoils and  vs.  Maharashtra Scooters Limited

Gokul Refoils

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gokul Refoils and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals 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.

Maharashtra Scooters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maharashtra Scooters Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Maharashtra Scooters is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gokul Refoils and Maharashtra Scooters

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

The idea behind Gokul Refoils and and Maharashtra Scooters 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.