Correlation Between Gujarat Fluorochemicals and Digjam

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

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

Diversification Opportunities for Gujarat Fluorochemicals and Digjam

0.22

Correlation Coefficient

Gujarat Fluorochemicals  Digjam

Modest diversification

The 3 months correlation between Gujarat and Digjam is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Fluorochemicals Limite and Digjam Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digjam Limited and Gujarat Fluorochemicals 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 Gujarat Fluorochemicals Limited are associated (or correlated) with Digjam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digjam Limited has no effect on the direction of Gujarat Fluorochemicals i.e., Gujarat Fluorochemicals and Digjam go up and down completely randomly.

Pair Corralation between Gujarat Fluorochemicals and Digjam

Assuming the 90 days trading horizon Gujarat Fluorochemicals Limited is expected to under-perform the Digjam. But the stock apears to be less risky and, when comparing its historical volatility, Gujarat Fluorochemicals Limited is 1.02 times less risky than Digjam. The stock trades about 0.0 of its potential returns per unit of risk. The Digjam Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,679  in Digjam Limited on September 14, 2024 and sell it today you would earn a total of  351.00  from holding Digjam Limited or generate 4.04% return on investment over 90 days.

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

Gujarat Fluorochemicals Limite  vs.  Digjam Limited

Gujarat Fluorochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Digjam Limited

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Digjam Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Digjam is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gujarat Fluorochemicals and Digjam

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

The idea behind Gujarat Fluorochemicals Limited and Digjam 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.