Correlation Between Orient Technologies and Gujarat Lease

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

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

Diversification Opportunities for Orient Technologies and Gujarat Lease

0.19

Correlation Coefficient

Orient Technologies  Gujarat Lease

Average diversification

The 3 months correlation between Orient and Gujarat is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Orient Technologies Limited and Gujarat Lease Financing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Lease Financing and Orient Technologies 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 Orient Technologies Limited are associated (or correlated) with Gujarat Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Lease Financing has no effect on the direction of Orient Technologies i.e., Orient Technologies and Gujarat Lease go up and down completely randomly.

Pair Corralation between Orient Technologies and Gujarat Lease

Assuming the 90 days trading horizon Orient Technologies Limited is expected to generate 1.84 times more return on investment than Gujarat Lease. However, Orient Technologies is 1.84 times more volatile than Gujarat Lease Financing. It trades about 0.23 of its potential returns per unit of risk. Gujarat Lease Financing is currently generating about 0.08 per unit of risk. If you would invest  27,418  in Orient Technologies Limited on September 30, 2024 and sell it today you would earn a total of  20,902  from holding Orient Technologies Limited or generate 76.23% return on investment over 90 days.

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

Orient Technologies Limited  vs.  Gujarat Lease Financing

Orient Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Technologies Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Orient Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gujarat Lease Financing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gujarat Lease Financing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Gujarat Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Orient Technologies and Gujarat Lease

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

The idea behind Orient Technologies Limited and Gujarat Lease Financing 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.