Correlation Between Hilton Metal and Garware Hi

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

By analyzing existing cross correlation between Hilton Metal Forging and Garware Hi Tech Films, you can compare the effects of market volatilities on Hilton Metal and Garware Hi 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 Hilton Metal with a short position of Garware Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Metal and Garware Hi.

Diversification Opportunities for Hilton Metal and Garware Hi

0.47

Correlation Coefficient

Hilton Metal  Garware Hi

Very weak diversification

The 3 months correlation between Hilton and Garware is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Garware Hi Tech Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Hi Tech and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with Garware Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Hi Tech has no effect on the direction of Hilton Metal i.e., Hilton Metal and Garware Hi go up and down completely randomly.

Pair Corralation between Hilton Metal and Garware Hi

Assuming the 90 days trading horizon Hilton Metal is expected to generate 3.37 times less return on investment than Garware Hi. But when comparing it to its historical volatility, Hilton Metal Forging is 1.09 times less risky than Garware Hi. It trades about 0.05 of its potential returns per unit of risk. Garware Hi Tech Films is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  65,076  in Garware Hi Tech Films on September 20, 2024 and sell it today you would earn a total of  455,594  from holding Garware Hi Tech Films or generate 700.1% return on investment over 90 days.

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

Hilton Metal Forging  vs.  Garware Hi Tech Films

Hilton Metal Forging

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Garware Hi Tech

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 17 (%) 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.

Pair Trading with Hilton Metal and Garware Hi

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

The idea behind Hilton Metal Forging and Garware Hi Tech Films 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.