Correlation Between Exide Industries and GTL

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

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

Diversification Opportunities for Exide Industries and GTL

0.66

Correlation Coefficient

Exide Industries  GTL

Poor diversification

The 3 months correlation between Exide and GTL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Exide Industries Limited and GTL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTL Limited and Exide Industries 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 Exide Industries Limited are associated (or correlated) with GTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTL Limited has no effect on the direction of Exide Industries i.e., Exide Industries and GTL go up and down completely randomly.

Pair Corralation between Exide Industries and GTL

Assuming the 90 days trading horizon Exide Industries Limited is expected to under-perform the GTL. But the stock apears to be less risky and, when comparing its historical volatility, Exide Industries Limited is 2.08 times less risky than GTL. The stock trades about -0.04 of its potential returns per unit of risk. The GTL Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,373  in GTL Limited on August 31, 2024 and sell it today you would lose (76.00) from holding GTL Limited or give up 5.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Exide Industries Limited  vs.  GTL Limited

Exide Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exide Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Exide Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

GTL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Exide Industries and GTL

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

The idea behind Exide Industries Limited and GTL Limited 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.