Correlation Between Gujarat Raffia and Zomato

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

By analyzing existing cross correlation between Gujarat Raffia Industries and Zomato Limited, you can compare the effects of market volatilities on Gujarat Raffia and Zomato 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 Gujarat Raffia with a short position of Zomato. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Raffia and Zomato.

Diversification Opportunities for Gujarat Raffia and Zomato

0.35

Correlation Coefficient

Gujarat Raffia  Zomato

Weak diversification

The 3 months correlation between Gujarat and Zomato is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Raffia Industries and Zomato Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zomato Limited and Gujarat Raffia 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 Gujarat Raffia Industries are associated (or correlated) with Zomato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zomato Limited has no effect on the direction of Gujarat Raffia i.e., Gujarat Raffia and Zomato go up and down completely randomly.

Pair Corralation between Gujarat Raffia and Zomato

Assuming the 90 days trading horizon Gujarat Raffia Industries is expected to under-perform the Zomato. In addition to that, Gujarat Raffia is 1.25 times more volatile than Zomato Limited. It trades about -0.17 of its total potential returns per unit of risk. Zomato Limited is currently generating about -0.15 per unit of volatility. If you would invest  29,530  in Zomato Limited on December 8, 2024 and sell it today you would lose (7,847) from holding Zomato Limited or give up 26.57% of portfolio value over 90 days.

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

Gujarat Raffia Industries  vs.  Zomato Limited

Gujarat Raffia Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gujarat Raffia Industries 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Zomato Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zomato Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gujarat Raffia and Zomato

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

The idea behind Gujarat Raffia Industries and Zomato 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.