Correlation Between Taj GVK and Indian Metals

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

Diversification Opportunities for Taj GVK and Indian Metals

-0.61

Correlation Coefficient

Taj GVK  Indian Metals

Excellent diversification

The 3 months correlation between Taj and Indian is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Taj GVK Hotels and Indian Metals Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Metals Ferro 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 Indian Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Metals Ferro has no effect on the direction of Taj GVK i.e., Taj GVK and Indian Metals go up and down completely randomly.

Pair Corralation between Taj GVK and Indian Metals

Assuming the 90 days trading horizon Taj GVK Hotels is expected to generate 1.69 times more return on investment than Indian Metals. However, Taj GVK is 1.69 times more volatile than Indian Metals Ferro. It trades about 0.15 of its potential returns per unit of risk. Indian Metals Ferro is currently generating about -0.14 per unit of risk. If you would invest  34,665  in Taj GVK Hotels on December 23, 2024 and sell it today you would earn a total of  16,675  from holding Taj GVK Hotels or generate 48.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Taj GVK Hotels  vs.  Indian Metals Ferro

Taj GVK Hotels

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

Indian Metals Ferro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indian Metals Ferro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Taj GVK and Indian Metals

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

The idea behind Taj GVK Hotels and Indian Metals Ferro 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.