Correlation Between Gokul Refoils and Neogen Chemicals

Can any of the company-specific risk be diversified away by investing in both Gokul Refoils and Neogen Chemicals 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 Neogen Chemicals 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 Neogen Chemicals Limited, you can compare the effects of market volatilities on Gokul Refoils and Neogen Chemicals 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 Neogen Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gokul Refoils and Neogen Chemicals.

Diversification Opportunities for Gokul Refoils and Neogen Chemicals

0.23

Correlation Coefficient

Gokul Refoils  Neogen Chemicals

Modest diversification

The 3 months correlation between Gokul and Neogen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gokul Refoils and and Neogen Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen Chemicals 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 Neogen Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen Chemicals has no effect on the direction of Gokul Refoils i.e., Gokul Refoils and Neogen Chemicals go up and down completely randomly.

Pair Corralation between Gokul Refoils and Neogen Chemicals

Assuming the 90 days trading horizon Gokul Refoils is expected to generate 2.63 times less return on investment than Neogen Chemicals. But when comparing it to its historical volatility, Gokul Refoils and is 1.25 times less risky than Neogen Chemicals. It trades about 0.07 of its potential returns per unit of risk. Neogen Chemicals Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  160,205  in Neogen Chemicals Limited on September 14, 2024 and sell it today you would earn a total of  63,025  from holding Neogen Chemicals Limited or generate 39.34% return on investment over 90 days.

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

Gokul Refoils and  vs.  Neogen Chemicals Limited

Gokul Refoils

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gokul Refoils and are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Gokul Refoils displayed solid returns over the last few months and may actually be approaching a breakup point.

Neogen Chemicals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neogen Chemicals Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical and fundamental indicators, Neogen Chemicals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gokul Refoils and Neogen Chemicals

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

The idea behind Gokul Refoils and and Neogen Chemicals 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.