Correlation Between Torrent Capital and Gabelli Equity

Can any of the company-specific risk be diversified away by investing in both Torrent Capital and Gabelli Equity 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 Torrent Capital and Gabelli Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Torrent Capital and The Gabelli Equity, you can compare the effects of market volatilities on Torrent Capital and Gabelli Equity 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 Torrent Capital with a short position of Gabelli Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torrent Capital and Gabelli Equity.

Diversification Opportunities for Torrent Capital and Gabelli Equity

-0.49

Correlation Coefficient

Torrent Capital  Gabelli Equity

Very good diversification

The 3 months correlation between Torrent and Gabelli is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Torrent Capital and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Torrent Capital 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 Torrent Capital are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Torrent Capital i.e., Torrent Capital and Gabelli Equity go up and down completely randomly.

Pair Corralation between Torrent Capital and Gabelli Equity

Assuming the 90 days horizon Torrent Capital is expected to under-perform the Gabelli Equity. In addition to that, Torrent Capital is 2.91 times more volatile than The Gabelli Equity. It trades about -0.02 of its total potential returns per unit of risk. The Gabelli Equity is currently generating about 0.04 per unit of volatility. If you would invest  2,095  in The Gabelli Equity on December 30, 2024 and sell it today you would earn a total of  23.00  from holding The Gabelli Equity or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Torrent Capital  vs.  The Gabelli Equity

Torrent Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Torrent Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Torrent Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Gabelli Equity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Equity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Gabelli Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Torrent Capital and Gabelli Equity

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

The idea behind Torrent Capital and The Gabelli Equity 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.