Correlation Between India Glycols and V2 Retail

Can any of the company-specific risk be diversified away by investing in both India Glycols and V2 Retail 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 India Glycols and V2 Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between India Glycols Limited and V2 Retail Limited, you can compare the effects of market volatilities on India Glycols and V2 Retail 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 India Glycols with a short position of V2 Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of India Glycols and V2 Retail.

Diversification Opportunities for India Glycols and V2 Retail

0.61

Correlation Coefficient

India Glycols  V2 Retail

Poor diversification

The 3 months correlation between India and V2RETAIL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding India Glycols Limited and V2 Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V2 Retail Limited and India Glycols 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 India Glycols Limited are associated (or correlated) with V2 Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V2 Retail Limited has no effect on the direction of India Glycols i.e., India Glycols and V2 Retail go up and down completely randomly.

Pair Corralation between India Glycols and V2 Retail

Assuming the 90 days trading horizon India Glycols Limited is expected to under-perform the V2 Retail. In addition to that, India Glycols is 1.17 times more volatile than V2 Retail Limited. It trades about 0.0 of its total potential returns per unit of risk. V2 Retail Limited is currently generating about 0.13 per unit of volatility. If you would invest  136,985  in V2 Retail Limited on October 4, 2024 and sell it today you would earn a total of  32,710  from holding V2 Retail Limited or generate 23.88% return on investment over 90 days.

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

India Glycols Limited  vs.  V2 Retail Limited

India Glycols Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days India Glycols Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, India Glycols is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

V2 Retail Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, V2 Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with India Glycols and V2 Retail

The main advantage of trading using opposite India Glycols and V2 Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if India Glycols position performs unexpectedly, V2 Retail 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 V2 Retail will offset losses from the drop in V2 Retail's long position.

The idea behind India Glycols Limited and V2 Retail 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.