Correlation Between Taj GVK and Aban Offshore

Can any of the company-specific risk be diversified away by investing in both Taj GVK and Aban Offshore 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 Taj GVK and Aban Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taj GVK Hotels and Aban Offshore Limited, you can compare the effects of market volatilities on Taj GVK and Aban Offshore 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 Taj GVK with a short position of Aban Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taj GVK and Aban Offshore.

Diversification Opportunities for Taj GVK and Aban Offshore

-0.24

Correlation Coefficient

Taj GVK  Aban Offshore

Very good diversification

The 3 months correlation between Taj and Aban is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Taj GVK Hotels and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited and Taj GVK 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 Taj GVK Hotels are associated (or correlated) with Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of Taj GVK i.e., Taj GVK and Aban Offshore go up and down completely randomly.

Pair Corralation between Taj GVK and Aban Offshore

Assuming the 90 days trading horizon Taj GVK Hotels is expected to generate 1.03 times more return on investment than Aban Offshore. However, Taj GVK is 1.03 times more volatile than Aban Offshore Limited. It trades about 0.1 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about 0.0 per unit of risk. If you would invest  32,706  in Taj GVK Hotels on October 8, 2024 and sell it today you would earn a total of  11,854  from holding Taj GVK Hotels or generate 36.24% return on investment over 90 days.

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

Taj GVK Hotels  vs.  Aban Offshore Limited

Taj GVK Hotels

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Taj GVK and Aban Offshore

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

The idea behind Taj GVK Hotels and Aban Offshore 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.