Correlation Between Omkar Speciality and Gujarat Fluorochemicals

Can any of the company-specific risk be diversified away by investing in both Omkar Speciality and Gujarat Fluorochemicals 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 Omkar Speciality and Gujarat Fluorochemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Omkar Speciality Chemicals and Gujarat Fluorochemicals Limited, you can compare the effects of market volatilities on Omkar Speciality and Gujarat Fluorochemicals 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 Omkar Speciality with a short position of Gujarat Fluorochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omkar Speciality and Gujarat Fluorochemicals.

Diversification Opportunities for Omkar Speciality and Gujarat Fluorochemicals

-0.08

Correlation Coefficient

Omkar Speciality  Gujarat Fluorochemicals

Good diversification

The 3 months correlation between Omkar and Gujarat is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Omkar Speciality Chemicals and Gujarat Fluorochemicals Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Fluorochemicals and Omkar Speciality 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 Omkar Speciality Chemicals are associated (or correlated) with Gujarat Fluorochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Fluorochemicals has no effect on the direction of Omkar Speciality i.e., Omkar Speciality and Gujarat Fluorochemicals go up and down completely randomly.

Pair Corralation between Omkar Speciality and Gujarat Fluorochemicals

Assuming the 90 days trading horizon Omkar Speciality Chemicals is expected to under-perform the Gujarat Fluorochemicals. In addition to that, Omkar Speciality is 1.41 times more volatile than Gujarat Fluorochemicals Limited. It trades about -0.12 of its total potential returns per unit of risk. Gujarat Fluorochemicals Limited is currently generating about -0.01 per unit of volatility. If you would invest  413,150  in Gujarat Fluorochemicals Limited on December 28, 2024 and sell it today you would lose (12,575) from holding Gujarat Fluorochemicals Limited or give up 3.04% of portfolio value over 90 days.

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

Omkar Speciality Chemicals  vs.  Gujarat Fluorochemicals Limite

Omkar Speciality Che

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omkar Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical indicators 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.

Gujarat Fluorochemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gujarat Fluorochemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Gujarat Fluorochemicals is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Omkar Speciality and Gujarat Fluorochemicals

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

The idea behind Omkar Speciality Chemicals and Gujarat Fluorochemicals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.