Correlation Between Garware Hi and Angel One

Can any of the company-specific risk be diversified away by investing in both Garware Hi and Angel One 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 Garware Hi and Angel One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garware Hi Tech Films and Angel One Limited, you can compare the effects of market volatilities on Garware Hi and Angel One 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 Garware Hi with a short position of Angel One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garware Hi and Angel One.

Diversification Opportunities for Garware Hi and Angel One

0.2

Correlation Coefficient

Garware Hi  Angel One

Modest diversification

The 3 months correlation between Garware and Angel is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Garware Hi Tech Films and Angel One Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel One Limited and Garware Hi 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 Garware Hi Tech Films are associated (or correlated) with Angel One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel One Limited has no effect on the direction of Garware Hi i.e., Garware Hi and Angel One go up and down completely randomly.

Pair Corralation between Garware Hi and Angel One

Assuming the 90 days trading horizon Garware Hi Tech Films is expected to generate 1.0 times more return on investment than Angel One. However, Garware Hi Tech Films is 1.0 times less risky than Angel One. It trades about 0.14 of its potential returns per unit of risk. Angel One Limited is currently generating about 0.01 per unit of risk. If you would invest  382,485  in Garware Hi Tech Films on October 11, 2024 and sell it today you would earn a total of  110,760  from holding Garware Hi Tech Films or generate 28.96% return on investment over 90 days.

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

Garware Hi Tech Films  vs.  Angel One Limited

Garware Hi Tech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Angel One Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Garware Hi and Angel One

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

The idea behind Garware Hi Tech Films and Angel One 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.