Correlation Between Garware Hi-Tech and Steel Authority

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

Diversification Opportunities for Garware Hi-Tech and Steel Authority

0.4

Correlation Coefficient

Garware Hi-Tech  Steel Authority

Very weak diversification

The 3 months correlation between Garware and Steel is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Garware Hi Tech Films and Steel Authority of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Authority and Garware Hi-Tech 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 Steel Authority. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Authority has no effect on the direction of Garware Hi-Tech i.e., Garware Hi-Tech and Steel Authority go up and down completely randomly.

Pair Corralation between Garware Hi-Tech and Steel Authority

Assuming the 90 days trading horizon Garware Hi Tech Films is expected to under-perform the Steel Authority. In addition to that, Garware Hi-Tech is 1.83 times more volatile than Steel Authority of. It trades about -0.06 of its total potential returns per unit of risk. Steel Authority of is currently generating about 0.03 per unit of volatility. If you would invest  11,173  in Steel Authority of on December 30, 2024 and sell it today you would earn a total of  345.00  from holding Steel Authority of or generate 3.09% return on investment over 90 days.

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

Garware Hi Tech Films  vs.  Steel Authority of

Garware Hi Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garware Hi Tech Films has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Steel Authority

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Authority of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Steel Authority is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Garware Hi-Tech and Steel Authority

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

The idea behind Garware Hi Tech Films and Steel Authority of 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.