Correlation Between Taj GVK and Beta Drugs

Can any of the company-specific risk be diversified away by investing in both Taj GVK and Beta Drugs 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 Beta Drugs 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 Beta Drugs, you can compare the effects of market volatilities on Taj GVK and Beta Drugs 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 Beta Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taj GVK and Beta Drugs.

Diversification Opportunities for Taj GVK and Beta Drugs

-0.41

Correlation Coefficient

Taj GVK  Beta Drugs

Very good diversification

The 3 months correlation between Taj and Beta is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Taj GVK Hotels and Beta Drugs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beta Drugs 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 Beta Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beta Drugs has no effect on the direction of Taj GVK i.e., Taj GVK and Beta Drugs go up and down completely randomly.

Pair Corralation between Taj GVK and Beta Drugs

Assuming the 90 days trading horizon Taj GVK Hotels is expected to generate 1.2 times more return on investment than Beta Drugs. However, Taj GVK is 1.2 times more volatile than Beta Drugs. It trades about 0.1 of its potential returns per unit of risk. Beta Drugs is currently generating about 0.0 per unit of risk. If you would invest  38,205  in Taj GVK Hotels on December 30, 2024 and sell it today you would earn a total of  9,575  from holding Taj GVK Hotels or generate 25.06% return on investment over 90 days.

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

Taj GVK Hotels  vs.  Beta Drugs

Taj GVK Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

Beta Drugs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beta Drugs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Beta Drugs 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 Beta Drugs

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

The idea behind Taj GVK Hotels and Beta Drugs 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.