Correlation Between Welspun Corp and Gujarat Raffia

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

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

Diversification Opportunities for Welspun Corp and Gujarat Raffia

0.41

Correlation Coefficient

Welspun Corp  Gujarat Raffia

Very weak diversification

The 3 months correlation between Welspun and Gujarat is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Welspun Corp 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 Welspun Corp 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 Welspun Corp 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 Welspun Corp i.e., Welspun Corp and Gujarat Raffia go up and down completely randomly.

Pair Corralation between Welspun Corp and Gujarat Raffia

Assuming the 90 days trading horizon Welspun Corp Limited is expected to generate 0.8 times more return on investment than Gujarat Raffia. However, Welspun Corp Limited is 1.25 times less risky than Gujarat Raffia. It trades about 0.05 of its potential returns per unit of risk. Gujarat Raffia Industries is currently generating about -0.39 per unit of risk. If you would invest  77,715  in Welspun Corp Limited on December 10, 2024 and sell it today you would earn a total of  1,600  from holding Welspun Corp Limited or generate 2.06% return on investment over 90 days.

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

Welspun Corp Limited  vs.  Gujarat Raffia Industries

Welspun Corp Limited

Risk-Adjusted Performance

Weak

Over the last 90 days Welspun Corp Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Welspun Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail 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 Welspun Corp and Gujarat Raffia

The main advantage of trading using opposite Welspun Corp and Gujarat Raffia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welspun Corp 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 Welspun Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.