Correlation Between Rajnandini Metal and Goldstone Technologies

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

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

Diversification Opportunities for Rajnandini Metal and Goldstone Technologies

0.27

Correlation Coefficient

Rajnandini Metal  Goldstone Technologies

Modest diversification

The 3 months correlation between Rajnandini and Goldstone is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Rajnandini Metal Limited and Goldstone Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldstone Technologies and Rajnandini Metal 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 Rajnandini Metal Limited are associated (or correlated) with Goldstone Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldstone Technologies has no effect on the direction of Rajnandini Metal i.e., Rajnandini Metal and Goldstone Technologies go up and down completely randomly.

Pair Corralation between Rajnandini Metal and Goldstone Technologies

Assuming the 90 days trading horizon Rajnandini Metal Limited is expected to generate 0.8 times more return on investment than Goldstone Technologies. However, Rajnandini Metal Limited is 1.25 times less risky than Goldstone Technologies. It trades about -0.08 of its potential returns per unit of risk. Goldstone Technologies Limited is currently generating about -0.08 per unit of risk. If you would invest  1,013  in Rajnandini Metal Limited on October 8, 2024 and sell it today you would lose (130.00) from holding Rajnandini Metal Limited or give up 12.83% of portfolio value over 90 days.

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

Rajnandini Metal Limited  vs.  Goldstone Technologies Limited

Rajnandini Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rajnandini Metal Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Goldstone Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldstone Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Rajnandini Metal and Goldstone Technologies

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

The idea behind Rajnandini Metal Limited and Goldstone Technologies Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..