Correlation Between Garware Hi and Aptech

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

Diversification Opportunities for Garware Hi and Aptech

-0.52

Correlation Coefficient

Garware Hi  Aptech

Excellent diversification

The 3 months correlation between Garware and Aptech is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Garware Hi Tech Films and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech 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 Aptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptech Limited has no effect on the direction of Garware Hi i.e., Garware Hi and Aptech go up and down completely randomly.

Pair Corralation between Garware Hi and Aptech

Assuming the 90 days trading horizon Garware Hi Tech Films is expected to generate 1.51 times more return on investment than Aptech. However, Garware Hi is 1.51 times more volatile than Aptech Limited. It trades about 0.19 of its potential returns per unit of risk. Aptech Limited is currently generating about -0.03 per unit of risk. If you would invest  222,125  in Garware Hi Tech Films on September 25, 2024 and sell it today you would earn a total of  280,175  from holding Garware Hi Tech Films or generate 126.13% return on investment over 90 days.

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

Garware Hi Tech Films  vs.  Aptech Limited

Garware Hi Tech

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aptech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Garware Hi and Aptech

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

The idea behind Garware Hi Tech Films and Aptech 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.