Correlation Between Taj GVK and FCS Software

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

Diversification Opportunities for Taj GVK and FCS Software

0.36

Correlation Coefficient

Taj GVK  FCS Software

Weak diversification

The 3 months correlation between Taj and FCS is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Taj GVK Hotels and FCS Software Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FCS Software Solutions 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 FCS Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FCS Software Solutions has no effect on the direction of Taj GVK i.e., Taj GVK and FCS Software go up and down completely randomly.

Pair Corralation between Taj GVK and FCS Software

Assuming the 90 days trading horizon Taj GVK Hotels is expected to generate 1.02 times more return on investment than FCS Software. However, Taj GVK is 1.02 times more volatile than FCS Software Solutions. It trades about 0.41 of its potential returns per unit of risk. FCS Software Solutions is currently generating about 0.17 per unit of risk. If you would invest  32,055  in Taj GVK Hotels on September 19, 2024 and sell it today you would earn a total of  6,795  from holding Taj GVK Hotels or generate 21.2% return on investment over 90 days.

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

Taj GVK Hotels  vs.  FCS Software Solutions

Taj GVK Hotels

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 13 (%) 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.

FCS Software Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Taj GVK and FCS Software

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

The idea behind Taj GVK Hotels and FCS Software Solutions 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.