Correlation Between GPT Healthcare and Kalyani Steels

Can any of the company-specific risk be diversified away by investing in both GPT Healthcare and Kalyani Steels 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 GPT Healthcare and Kalyani Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for GPT Healthcare and Kalyani Steels

0.54

Correlation Coefficient

GPT Healthcare  Kalyani Steels

Very weak diversification

The 3 months correlation between GPT and Kalyani is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding GPT Healthcare and Kalyani Steels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalyani Steels and GPT Healthcare 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 GPT Healthcare are associated (or correlated) with Kalyani Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalyani Steels has no effect on the direction of GPT Healthcare i.e., GPT Healthcare and Kalyani Steels go up and down completely randomly.

Pair Corralation between GPT Healthcare and Kalyani Steels

Assuming the 90 days trading horizon GPT Healthcare is expected to under-perform the Kalyani Steels. In addition to that, GPT Healthcare is 1.03 times more volatile than Kalyani Steels Limited. It trades about 0.0 of its total potential returns per unit of risk. Kalyani Steels Limited is currently generating about 0.09 per unit of volatility. If you would invest  35,270  in Kalyani Steels Limited on September 5, 2024 and sell it today you would earn a total of  57,045  from holding Kalyani Steels Limited or generate 161.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	39.01%
Values	Daily Returns

GPT Healthcare  vs.  Kalyani Steels Limited

GPT Healthcare

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GPT Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, GPT Healthcare is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Kalyani Steels

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kalyani Steels Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kalyani Steels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GPT Healthcare and Kalyani Steels

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

The idea behind GPT Healthcare and Kalyani Steels 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.