Correlation Between Krebs Biochemicals and Golden Tobacco

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

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

Diversification Opportunities for Krebs Biochemicals and Golden Tobacco

0.35

Correlation Coefficient

Krebs Biochemicals  Golden Tobacco

Weak diversification

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

Pair Corralation between Krebs Biochemicals and Golden Tobacco

Assuming the 90 days trading horizon Krebs Biochemicals and is expected to under-perform the Golden Tobacco. In addition to that, Krebs Biochemicals is 1.15 times more volatile than Golden Tobacco Limited. It trades about -0.13 of its total potential returns per unit of risk. Golden Tobacco Limited is currently generating about -0.03 per unit of volatility. If you would invest  4,076  in Golden Tobacco Limited on December 2, 2024 and sell it today you would lose (315.00) from holding Golden Tobacco Limited or give up 7.73% of portfolio value over 90 days.

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

Krebs Biochemicals and  vs.  Golden Tobacco Limited

Krebs Biochemicals and

Risk-Adjusted Performance

Very Weak

Over the last 90 days Krebs Biochemicals and 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 fundamental drivers 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.

Golden Tobacco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Tobacco Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Golden Tobacco is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Krebs Biochemicals and Golden Tobacco

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

The idea behind Krebs Biochemicals and and Golden Tobacco 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.