Correlation Between Garware Hi and Keynote Financial

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

Diversification Opportunities for Garware Hi and Keynote Financial

-0.31

Correlation Coefficient

Garware Hi  Keynote Financial

Very good diversification

The 3 months correlation between Garware and Keynote is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Garware Hi Tech Films and Keynote Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keynote Financial 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 Keynote Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keynote Financial has no effect on the direction of Garware Hi i.e., Garware Hi and Keynote Financial go up and down completely randomly.

Pair Corralation between Garware Hi and Keynote Financial

Assuming the 90 days trading horizon Garware Hi Tech Films is expected to generate 0.91 times more return on investment than Keynote Financial. However, Garware Hi Tech Films is 1.09 times less risky than Keynote Financial. It trades about 0.21 of its potential returns per unit of risk. Keynote Financial Services is currently generating about 0.07 per unit of risk. If you would invest  160,824  in Garware Hi Tech Films on September 24, 2024 and sell it today you would earn a total of  339,291  from holding Garware Hi Tech Films or generate 210.97% return on investment over 90 days.

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

Garware Hi Tech Films  vs.  Keynote Financial Services

Garware Hi Tech

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Keynote Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keynote Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Keynote Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Garware Hi and Keynote Financial

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

The idea behind Garware Hi Tech Films and Keynote Financial Services 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.