Correlation Between Torrent Capital and Gabelli Multimedia

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

Diversification Opportunities for Torrent Capital and Gabelli Multimedia

0.28

Correlation Coefficient

Torrent Capital  Gabelli Multimedia

Modest diversification

The 3 months correlation between Torrent and Gabelli is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Torrent Capital and The Gabelli Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Multimedia 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 Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Multimedia has no effect on the direction of Torrent Capital i.e., Torrent Capital and Gabelli Multimedia go up and down completely randomly.

Pair Corralation between Torrent Capital and Gabelli Multimedia

Assuming the 90 days horizon Torrent Capital is expected to generate 4.18 times more return on investment than Gabelli Multimedia. However, Torrent Capital is 4.18 times more volatile than The Gabelli Multimedia. It trades about 0.09 of its potential returns per unit of risk. The Gabelli Multimedia is currently generating about 0.0 per unit of risk. If you would invest  39.00  in Torrent Capital on December 1, 2024 and sell it today you would earn a total of  5.00  from holding Torrent Capital or generate 12.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Torrent Capital  vs.  The Gabelli Multimedia

Torrent Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Torrent Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Torrent Capital reported solid returns over the last few months and may actually be approaching a breakup point.

The Gabelli Multimedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gabelli Multimedia is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Torrent Capital and Gabelli Multimedia

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

The idea behind Torrent Capital and The Gabelli Multimedia 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.