Correlation Between Indian Metals and Gokul Refoils

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

By analyzing existing cross correlation between Indian Metals Ferro and Gokul Refoils and, you can compare the effects of market volatilities on Indian Metals and Gokul Refoils 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 Indian Metals with a short position of Gokul Refoils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Metals and Gokul Refoils.

Diversification Opportunities for Indian Metals and Gokul Refoils

0.66

Correlation Coefficient

Indian Metals  Gokul Refoils

Poor diversification

The 3 months correlation between Indian and Gokul is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro and Gokul Refoils and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gokul Refoils and Indian Metals 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 Indian Metals Ferro are associated (or correlated) with Gokul Refoils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gokul Refoils has no effect on the direction of Indian Metals i.e., Indian Metals and Gokul Refoils go up and down completely randomly.

Pair Corralation between Indian Metals and Gokul Refoils

Assuming the 90 days trading horizon Indian Metals Ferro is expected to generate 0.93 times more return on investment than Gokul Refoils. However, Indian Metals Ferro is 1.07 times less risky than Gokul Refoils. It trades about 0.18 of its potential returns per unit of risk. Gokul Refoils and is currently generating about 0.14 per unit of risk. If you would invest  68,293  in Indian Metals Ferro on October 8, 2024 and sell it today you would earn a total of  21,797  from holding Indian Metals Ferro or generate 31.92% return on investment over 90 days.

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

Indian Metals Ferro  vs.  Gokul Refoils and

Indian Metals Ferro

Risk-Adjusted Performance

14 of 100

Good

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

Gokul Refoils

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gokul Refoils and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward-looking signals, Gokul Refoils displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indian Metals and Gokul Refoils

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

The idea behind Indian Metals Ferro and Gokul Refoils and 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.