Correlation Between General Engineering and G J

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

By analyzing existing cross correlation between General Engineering Public and G J Steel, you can compare the effects of market volatilities on General Engineering and G J 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 General Engineering with a short position of G J. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Engineering and G J.

Diversification Opportunities for General Engineering and G J

0.79

Correlation Coefficient

General Engineering  G J

Poor diversification

The 3 months correlation between General and GJS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Engineering Public and G J Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G J Steel and General Engineering 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 General Engineering Public are associated (or correlated) with G J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G J Steel has no effect on the direction of General Engineering i.e., General Engineering and G J go up and down completely randomly.

Pair Corralation between General Engineering and G J

Assuming the 90 days trading horizon General Engineering is expected to generate 1.03 times less return on investment than G J. In addition to that, General Engineering is 1.0 times more volatile than G J Steel. It trades about 0.04 of its total potential returns per unit of risk. G J Steel is currently generating about 0.04 per unit of volatility. If you would invest  35.00  in G J Steel on September 24, 2024 and sell it today you would lose (20.00) from holding G J Steel or give up 57.14% of portfolio value over 90 days.

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

General Engineering Public  vs.  G J Steel

General Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

G J Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G J Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with General Engineering and G J

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

The idea behind General Engineering Public and G J Steel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.