Correlation Between Paint Chemicals and Golden Textiles

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

By analyzing existing cross correlation between Paint Chemicals Industries and Golden Textiles Clothes, you can compare the effects of market volatilities on Paint Chemicals and Golden Textiles 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 Paint Chemicals with a short position of Golden Textiles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paint Chemicals and Golden Textiles.

Diversification Opportunities for Paint Chemicals and Golden Textiles

0.0

Correlation Coefficient

Paint Chemicals  Golden Textiles

Pay attention - limited upside

The 3 months correlation between Paint and Golden is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Paint Chemicals Industries and Golden Textiles Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Textiles Clothes and Paint Chemicals 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 Paint Chemicals Industries are associated (or correlated) with Golden Textiles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Textiles Clothes has no effect on the direction of Paint Chemicals i.e., Paint Chemicals and Golden Textiles go up and down completely randomly.

Pair Corralation between Paint Chemicals and Golden Textiles

If you would invest  2,605  in Golden Textiles Clothes on October 20, 2024 and sell it today you would lose (2.00) from holding Golden Textiles Clothes or give up 0.08% of portfolio value over 90 days.

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

Paint Chemicals Industries  vs.  Golden Textiles Clothes

Paint Chemicals Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paint Chemicals Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Paint Chemicals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Golden Textiles Clothes

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Textiles Clothes are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Golden Textiles reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paint Chemicals and Golden Textiles

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

The idea behind Paint Chemicals Industries and Golden Textiles Clothes 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.