Correlation Between Orient Technologies and Gujarat Narmada

Can any of the company-specific risk be diversified away by investing in both Orient Technologies and Gujarat Narmada 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 Narmada 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 Narmada Valley, you can compare the effects of market volatilities on Orient Technologies and Gujarat Narmada 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 Narmada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Technologies and Gujarat Narmada.

Diversification Opportunities for Orient Technologies and Gujarat Narmada

-0.68

Correlation Coefficient

Orient Technologies  Gujarat Narmada

Excellent diversification

The 3 months correlation between Orient and Gujarat is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Orient Technologies Limited and Gujarat Narmada Valley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Narmada Valley 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 Narmada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Narmada Valley has no effect on the direction of Orient Technologies i.e., Orient Technologies and Gujarat Narmada go up and down completely randomly.

Pair Corralation between Orient Technologies and Gujarat Narmada

Assuming the 90 days trading horizon Orient Technologies Limited is expected to generate 1.97 times more return on investment than Gujarat Narmada. However, Orient Technologies is 1.97 times more volatile than Gujarat Narmada Valley. It trades about 0.15 of its potential returns per unit of risk. Gujarat Narmada Valley is currently generating about -0.03 per unit of risk. If you would invest  30,545  in Orient Technologies Limited on September 12, 2024 and sell it today you would earn a total of  12,430  from holding Orient Technologies Limited or generate 40.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Orient Technologies Limited  vs.  Gujarat Narmada Valley

Orient Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Technologies Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Orient Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gujarat Narmada Valley

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Orient Technologies and Gujarat Narmada

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

The idea behind Orient Technologies Limited and Gujarat Narmada Valley 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.