Correlation Between Ratnamani Metals and Goldstone Technologies

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

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

Diversification Opportunities for Ratnamani Metals and Goldstone Technologies

0.23

Correlation Coefficient

Ratnamani Metals  Goldstone Technologies

Modest diversification

The 3 months correlation between Ratnamani and Goldstone is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ratnamani Metals Tubes and Goldstone Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldstone Technologies and Ratnamani Metals 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 Ratnamani Metals Tubes 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 Ratnamani Metals i.e., Ratnamani Metals and Goldstone Technologies go up and down completely randomly.

Pair Corralation between Ratnamani Metals and Goldstone Technologies

Assuming the 90 days trading horizon Ratnamani Metals Tubes is expected to generate 0.54 times more return on investment than Goldstone Technologies. However, Ratnamani Metals Tubes is 1.85 times less risky than Goldstone Technologies. It trades about -0.1 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  355,890  in Ratnamani Metals Tubes on October 8, 2024 and sell it today you would lose (35,855) from holding Ratnamani Metals Tubes or give up 10.07% of portfolio value over 90 days.

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

Ratnamani Metals Tubes  vs.  Goldstone Technologies Limited

Ratnamani Metals Tubes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratnamani Metals Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic 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 Ratnamani Metals and Goldstone Technologies

The main advantage of trading using opposite Ratnamani Metals and Goldstone Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ratnamani Metals 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 Ratnamani Metals Tubes 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.