Correlation Between G-Tec Jainx and Maithan Alloys

Can any of the company-specific risk be diversified away by investing in both G-Tec Jainx and Maithan Alloys 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 G-Tec Jainx and Maithan Alloys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G Tec Jainx Education and Maithan Alloys Limited, you can compare the effects of market volatilities on G-Tec Jainx and Maithan Alloys 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 G-Tec Jainx with a short position of Maithan Alloys. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-Tec Jainx and Maithan Alloys.

Diversification Opportunities for G-Tec Jainx and Maithan Alloys

0.7

Correlation Coefficient

G-Tec Jainx  Maithan Alloys

Poor diversification

The 3 months correlation between G-Tec and Maithan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and Maithan Alloys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maithan Alloys and G-Tec Jainx 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 G Tec Jainx Education are associated (or correlated) with Maithan Alloys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maithan Alloys has no effect on the direction of G-Tec Jainx i.e., G-Tec Jainx and Maithan Alloys go up and down completely randomly.

Pair Corralation between G-Tec Jainx and Maithan Alloys

Assuming the 90 days trading horizon G Tec Jainx Education is expected to generate 1.08 times more return on investment than Maithan Alloys. However, G-Tec Jainx is 1.08 times more volatile than Maithan Alloys Limited. It trades about -0.11 of its potential returns per unit of risk. Maithan Alloys Limited is currently generating about -0.13 per unit of risk. If you would invest  3,760  in G Tec Jainx Education on December 8, 2024 and sell it today you would lose (720.00) from holding G Tec Jainx Education or give up 19.15% of portfolio value over 90 days.

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

G Tec Jainx Education  vs.  Maithan Alloys Limited

G Tec Jainx

Risk-Adjusted Performance

Very Weak

Over the last 90 days G Tec Jainx Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Maithan Alloys

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maithan Alloys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with G-Tec Jainx and Maithan Alloys

The main advantage of trading using opposite G-Tec Jainx and Maithan Alloys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G-Tec Jainx position performs unexpectedly, Maithan Alloys 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 Maithan Alloys will offset losses from the drop in Maithan Alloys' long position.

The idea behind G Tec Jainx Education and Maithan Alloys 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.