Correlation Between Patanjali Foods and Gokul Refoils

Can any of the company-specific risk be diversified away by investing in both Patanjali Foods and Gokul Refoils 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 Patanjali Foods and Gokul Refoils into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Patanjali Foods Limited and Gokul Refoils and, you can compare the effects of market volatilities on Patanjali Foods and Gokul Refoils 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 Patanjali Foods with a short position of Gokul Refoils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patanjali Foods and Gokul Refoils.

Diversification Opportunities for Patanjali Foods and Gokul Refoils

0.65

Correlation Coefficient

Patanjali Foods  Gokul Refoils

Poor diversification

The 3 months correlation between Patanjali and Gokul is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Patanjali Foods Limited and Gokul Refoils and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gokul Refoils and Patanjali Foods 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 Patanjali Foods Limited are associated (or correlated) with Gokul Refoils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gokul Refoils has no effect on the direction of Patanjali Foods i.e., Patanjali Foods and Gokul Refoils go up and down completely randomly.

Pair Corralation between Patanjali Foods and Gokul Refoils

Assuming the 90 days trading horizon Patanjali Foods is expected to generate 8.58 times less return on investment than Gokul Refoils. In addition to that, Patanjali Foods is 1.04 times more volatile than Gokul Refoils and. It trades about 0.03 of its total potential returns per unit of risk. Gokul Refoils and is currently generating about 0.24 per unit of volatility. If you would invest  6,133  in Gokul Refoils and on October 8, 2024 and sell it today you would earn a total of  349.00  from holding Gokul Refoils and or generate 5.69% return on investment over 90 days.

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

Patanjali Foods Limited  vs.  Gokul Refoils and

Patanjali Foods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Patanjali Foods Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Patanjali Foods may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gokul Refoils

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gokul Refoils and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward-looking signals, Gokul Refoils displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Patanjali Foods and Gokul Refoils

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

The idea behind Patanjali Foods Limited and Gokul Refoils and 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.