Correlation Between Gujarat Fluorochemicals and Mangalam Drugs

Can any of the company-specific risk be diversified away by investing in both Gujarat Fluorochemicals and Mangalam Drugs 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 Mangalam Drugs 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 Mangalam Drugs And, you can compare the effects of market volatilities on Gujarat Fluorochemicals and Mangalam Drugs 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 Mangalam Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Fluorochemicals and Mangalam Drugs.

Diversification Opportunities for Gujarat Fluorochemicals and Mangalam Drugs

0.3

Correlation Coefficient

Gujarat Fluorochemicals  Mangalam Drugs

Weak diversification

The 3 months correlation between Gujarat and Mangalam is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Fluorochemicals Limite and Mangalam Drugs And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangalam Drugs And 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 Mangalam Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangalam Drugs And has no effect on the direction of Gujarat Fluorochemicals i.e., Gujarat Fluorochemicals and Mangalam Drugs go up and down completely randomly.

Pair Corralation between Gujarat Fluorochemicals and Mangalam Drugs

Assuming the 90 days trading horizon Gujarat Fluorochemicals Limited is expected to generate 0.91 times more return on investment than Mangalam Drugs. However, Gujarat Fluorochemicals Limited is 1.1 times less risky than Mangalam Drugs. It trades about 0.04 of its potential returns per unit of risk. Mangalam Drugs And is currently generating about -0.03 per unit of risk. If you would invest  429,336  in Gujarat Fluorochemicals Limited on September 12, 2024 and sell it today you would earn a total of  16,104  from holding Gujarat Fluorochemicals Limited or generate 3.75% 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.  Mangalam Drugs And

Gujarat Fluorochemicals

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gujarat Fluorochemicals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Mangalam Drugs And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangalam Drugs And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Mangalam Drugs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gujarat Fluorochemicals and Mangalam Drugs

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

The idea behind Gujarat Fluorochemicals Limited and Mangalam Drugs And 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.