Correlation Between MAS Financial and Gallantt Ispat

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

By analyzing existing cross correlation between MAS Financial Services and Gallantt Ispat Limited, you can compare the effects of market volatilities on MAS Financial and Gallantt Ispat 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 MAS Financial with a short position of Gallantt Ispat. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAS Financial and Gallantt Ispat.

Diversification Opportunities for MAS Financial and Gallantt Ispat

-0.1

Correlation Coefficient

MAS Financial  Gallantt Ispat

Good diversification

The 3 months correlation between MAS and Gallantt is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MAS Financial Services and Gallantt Ispat Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gallantt Ispat and MAS Financial 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 MAS Financial Services are associated (or correlated) with Gallantt Ispat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gallantt Ispat has no effect on the direction of MAS Financial i.e., MAS Financial and Gallantt Ispat go up and down completely randomly.

Pair Corralation between MAS Financial and Gallantt Ispat

Assuming the 90 days trading horizon MAS Financial Services is expected to generate 0.75 times more return on investment than Gallantt Ispat. However, MAS Financial Services is 1.33 times less risky than Gallantt Ispat. It trades about -0.12 of its potential returns per unit of risk. Gallantt Ispat Limited is currently generating about -0.1 per unit of risk. If you would invest  29,595  in MAS Financial Services on October 18, 2024 and sell it today you would lose (4,890) from holding MAS Financial Services or give up 16.52% of portfolio value over 90 days.

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

MAS Financial Services  vs.  Gallantt Ispat Limited

MAS Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gallantt Ispat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gallantt Ispat Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MAS Financial and Gallantt Ispat

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

The idea behind MAS Financial Services and Gallantt Ispat 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.