Correlation Between GM Breweries and Melstar Information

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

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

Diversification Opportunities for GM Breweries and Melstar Information

0.0

Correlation Coefficient

GM Breweries  Melstar Information

Pay attention - limited upside

The 3 months correlation between GMBREW and Melstar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GM Breweries Limited and Melstar Information Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melstar Information and GM Breweries 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 GM Breweries Limited are associated (or correlated) with Melstar Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melstar Information has no effect on the direction of GM Breweries i.e., GM Breweries and Melstar Information go up and down completely randomly.

Pair Corralation between GM Breweries and Melstar Information

If you would invest  425.00  in Melstar Information Technologies on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Melstar Information Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GM Breweries Limited  vs.  Melstar Information Technologi

GM Breweries Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Melstar Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GM Breweries and Melstar Information

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

The idea behind GM Breweries Limited and Melstar Information Technologies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.