Correlation Between VIP Clothing and Gujarat Raffia

Can any of the company-specific risk be diversified away by investing in both VIP Clothing and Gujarat Raffia 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 VIP Clothing and Gujarat Raffia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VIP Clothing Limited and Gujarat Raffia Industries, you can compare the effects of market volatilities on VIP Clothing and Gujarat Raffia 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 VIP Clothing with a short position of Gujarat Raffia. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIP Clothing and Gujarat Raffia.

Diversification Opportunities for VIP Clothing and Gujarat Raffia

0.92

Correlation Coefficient

VIP Clothing  Gujarat Raffia

Almost no diversification

The 3 months correlation between VIP and Gujarat is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding VIP Clothing Limited and Gujarat Raffia Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Raffia Industries and VIP Clothing 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 VIP Clothing Limited are associated (or correlated) with Gujarat Raffia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Raffia Industries has no effect on the direction of VIP Clothing i.e., VIP Clothing and Gujarat Raffia go up and down completely randomly.

Pair Corralation between VIP Clothing and Gujarat Raffia

Assuming the 90 days trading horizon VIP Clothing Limited is expected to generate 1.14 times more return on investment than Gujarat Raffia. However, VIP Clothing is 1.14 times more volatile than Gujarat Raffia Industries. It trades about -0.24 of its potential returns per unit of risk. Gujarat Raffia Industries is currently generating about -0.51 per unit of risk. If you would invest  4,843  in VIP Clothing Limited on December 27, 2024 and sell it today you would lose (1,968) from holding VIP Clothing Limited or give up 40.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

VIP Clothing Limited  vs.  Gujarat Raffia Industries

VIP Clothing Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days VIP Clothing Limited 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 technical 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.

Gujarat Raffia Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gujarat Raffia Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with VIP Clothing and Gujarat Raffia

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

The idea behind VIP Clothing Limited and Gujarat Raffia Industries 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..