Correlation Between Gokul Refoils and Ortel Communications

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

Diversification Opportunities for Gokul Refoils and Ortel Communications

0.73

Correlation Coefficient

Gokul Refoils  Ortel Communications

Poor diversification

The 3 months correlation between Gokul and Ortel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gokul Refoils and and Ortel Communications Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ortel Communications 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 Ortel Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ortel Communications has no effect on the direction of Gokul Refoils i.e., Gokul Refoils and Ortel Communications go up and down completely randomly.

Pair Corralation between Gokul Refoils and Ortel Communications

Assuming the 90 days trading horizon Gokul Refoils and is expected to under-perform the Ortel Communications. But the stock apears to be less risky and, when comparing its historical volatility, Gokul Refoils and is 1.1 times less risky than Ortel Communications. The stock trades about -0.14 of its potential returns per unit of risk. The Ortel Communications Limited is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  223.00  in Ortel Communications Limited on December 23, 2024 and sell it today you would lose (35.00) from holding Ortel Communications Limited or give up 15.7% of portfolio value over 90 days.

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

Gokul Refoils and  vs.  Ortel Communications 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 weak 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.

Ortel Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ortel Communications Limited 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 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 Gokul Refoils and Ortel Communications

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

The idea behind Gokul Refoils and and Ortel Communications 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.