Correlation Between Sintex Plastics and Gujarat Lease

Can any of the company-specific risk be diversified away by investing in both Sintex Plastics and Gujarat Lease 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 Sintex Plastics and Gujarat Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sintex Plastics Technology and Gujarat Lease Financing, you can compare the effects of market volatilities on Sintex Plastics and Gujarat Lease 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 Sintex Plastics with a short position of Gujarat Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sintex Plastics and Gujarat Lease.

Diversification Opportunities for Sintex Plastics and Gujarat Lease

0.0

Correlation Coefficient

Sintex Plastics  Gujarat Lease

Pay attention - limited upside

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

Pair Corralation between Sintex Plastics and Gujarat Lease

Assuming the 90 days trading horizon Sintex Plastics Technology is expected to under-perform the Gujarat Lease. But the stock apears to be less risky and, when comparing its historical volatility, Sintex Plastics Technology is 1.32 times less risky than Gujarat Lease. The stock trades about -0.02 of its potential returns per unit of risk. The Gujarat Lease Financing is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Gujarat Lease Financing on September 12, 2024 and sell it today you would earn a total of  572.00  from holding Gujarat Lease Financing or generate 193.9% return on investment over 90 days.

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

Sintex Plastics Technology  vs.  Gujarat Lease Financing

Sintex Plastics Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sintex Plastics Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sintex Plastics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gujarat Lease Financing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gujarat Lease Financing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gujarat Lease unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sintex Plastics and Gujarat Lease

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

The idea behind Sintex Plastics Technology and Gujarat Lease Financing 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.