Correlation Between Gokul Refoils and Southern Petrochemicals

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

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

Diversification Opportunities for Gokul Refoils and Southern Petrochemicals

-0.31

Correlation Coefficient

Gokul Refoils  Southern Petrochemicals

Very good diversification

The 3 months correlation between Gokul and Southern is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gokul Refoils and and Southern Petrochemicals Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Petrochemicals and Gokul Refoils 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 Gokul Refoils and are associated (or correlated) with Southern Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Petrochemicals has no effect on the direction of Gokul Refoils i.e., Gokul Refoils and Southern Petrochemicals go up and down completely randomly.

Pair Corralation between Gokul Refoils and Southern Petrochemicals

Assuming the 90 days trading horizon Gokul Refoils and is expected to generate 1.57 times more return on investment than Southern Petrochemicals. However, Gokul Refoils is 1.57 times more volatile than Southern Petrochemicals Industries. It trades about 0.12 of its potential returns per unit of risk. Southern Petrochemicals Industries is currently generating about -0.11 per unit of risk. If you would invest  5,070  in Gokul Refoils and on September 25, 2024 and sell it today you would earn a total of  1,177  from holding Gokul Refoils and or generate 23.21% return on investment over 90 days.

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

Gokul Refoils and  vs.  Southern Petrochemicals Indust

Gokul Refoils

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gokul Refoils and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward-looking signals, Gokul Refoils displayed solid returns over the last few months and may actually be approaching a breakup point.

Southern Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Petrochemicals Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gokul Refoils and Southern Petrochemicals

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

The idea behind Gokul Refoils and and Southern Petrochemicals Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.