Correlation Between One 97 and Garware Hi

Can any of the company-specific risk be diversified away by investing in both One 97 and Garware Hi 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 One 97 and Garware Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between One 97 Communications and Garware Hi Tech Films, you can compare the effects of market volatilities on One 97 and Garware Hi 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 One 97 with a short position of Garware Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of One 97 and Garware Hi.

Diversification Opportunities for One 97 and Garware Hi

0.89

Correlation Coefficient

One 97  Garware Hi

Very poor diversification

The 3 months correlation between One and Garware is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding One 97 Communications and Garware Hi Tech Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Hi Tech and One 97 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 One 97 Communications are associated (or correlated) with Garware Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Hi Tech has no effect on the direction of One 97 i.e., One 97 and Garware Hi go up and down completely randomly.

Pair Corralation between One 97 and Garware Hi

Assuming the 90 days trading horizon One 97 is expected to generate 1.08 times less return on investment than Garware Hi. But when comparing it to its historical volatility, One 97 Communications is 1.06 times less risky than Garware Hi. It trades about 0.19 of its potential returns per unit of risk. Garware Hi Tech Films is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  323,656  in Garware Hi Tech Films on September 2, 2024 and sell it today you would earn a total of  170,049  from holding Garware Hi Tech Films or generate 52.54% return on investment over 90 days.

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

One 97 Communications  vs.  Garware Hi Tech Films

One 97 Communications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One 97 Communications are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, One 97 displayed solid returns over the last few months and may actually be approaching a breakup point.

Garware Hi Tech

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One 97 and Garware Hi

The main advantage of trading using opposite One 97 and Garware Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One 97 position performs unexpectedly, Garware Hi 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 Garware Hi will offset losses from the drop in Garware Hi's long position.

The idea behind One 97 Communications and Garware Hi Tech Films 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.