Correlation Between V2 Retail and Garware Hi-Tech

Can any of the company-specific risk be diversified away by investing in both V2 Retail and Garware Hi-Tech 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 V2 Retail and Garware Hi-Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between V2 Retail Limited and Garware Hi Tech Films, you can compare the effects of market volatilities on V2 Retail and Garware Hi-Tech 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 V2 Retail with a short position of Garware Hi-Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of V2 Retail and Garware Hi-Tech.

Diversification Opportunities for V2 Retail and Garware Hi-Tech

-0.34

Correlation Coefficient

V2 Retail  Garware Hi-Tech

Very good diversification

The 3 months correlation between V2RETAIL and Garware is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding V2 Retail Limited and Garware Hi Tech Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Hi Tech and V2 Retail 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 V2 Retail Limited are associated (or correlated) with Garware Hi-Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Hi Tech has no effect on the direction of V2 Retail i.e., V2 Retail and Garware Hi-Tech go up and down completely randomly.

Pair Corralation between V2 Retail and Garware Hi-Tech

Assuming the 90 days trading horizon V2 Retail Limited is expected to generate 0.72 times more return on investment than Garware Hi-Tech. However, V2 Retail Limited is 1.4 times less risky than Garware Hi-Tech. It trades about 0.03 of its potential returns per unit of risk. Garware Hi Tech Films is currently generating about -0.06 per unit of risk. If you would invest  163,500  in V2 Retail Limited on December 28, 2024 and sell it today you would earn a total of  5,765  from holding V2 Retail Limited or generate 3.53% return on investment over 90 days.

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

V2 Retail Limited  vs.  Garware Hi Tech Films

V2 Retail Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in V2 Retail Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, V2 Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Garware Hi Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garware Hi Tech Films has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental 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 V2 Retail and Garware Hi-Tech

The main advantage of trading using opposite V2 Retail and Garware Hi-Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V2 Retail position performs unexpectedly, Garware Hi-Tech 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 Garware Hi-Tech will offset losses from the drop in Garware Hi-Tech's long position.

The idea behind V2 Retail Limited and Garware Hi Tech Films 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.