Correlation Between Goldstone Technologies and Sapphire Foods

Can any of the company-specific risk be diversified away by investing in both Goldstone Technologies and Sapphire Foods 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 Goldstone Technologies and Sapphire Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldstone Technologies Limited and Sapphire Foods India, you can compare the effects of market volatilities on Goldstone Technologies and Sapphire Foods 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 Goldstone Technologies with a short position of Sapphire Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldstone Technologies and Sapphire Foods.

Diversification Opportunities for Goldstone Technologies and Sapphire Foods

0.41

Correlation Coefficient

Goldstone Technologies  Sapphire Foods

Very weak diversification

The 3 months correlation between Goldstone and Sapphire is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Goldstone Technologies Limited and Sapphire Foods India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapphire Foods India and Goldstone Technologies 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 Goldstone Technologies Limited are associated (or correlated) with Sapphire Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapphire Foods India has no effect on the direction of Goldstone Technologies i.e., Goldstone Technologies and Sapphire Foods go up and down completely randomly.

Pair Corralation between Goldstone Technologies and Sapphire Foods

Assuming the 90 days trading horizon Goldstone Technologies Limited is expected to under-perform the Sapphire Foods. In addition to that, Goldstone Technologies is 1.49 times more volatile than Sapphire Foods India. It trades about -0.12 of its total potential returns per unit of risk. Sapphire Foods India is currently generating about 0.0 per unit of volatility. If you would invest  35,745  in Sapphire Foods India on October 10, 2024 and sell it today you would lose (300.00) from holding Sapphire Foods India or give up 0.84% of portfolio value over 90 days.

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

Goldstone Technologies Limited  vs.  Sapphire Foods India

Goldstone Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldstone Technologies Limited 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sapphire Foods India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapphire Foods India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Sapphire Foods is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Goldstone Technologies and Sapphire Foods

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

The idea behind Goldstone Technologies Limited and Sapphire Foods India 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.