Correlation Between Gokul Refoils and TPL Plastech

Can any of the company-specific risk be diversified away by investing in both Gokul Refoils and TPL Plastech 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 TPL Plastech 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 TPL Plastech Limited, you can compare the effects of market volatilities on Gokul Refoils and TPL Plastech 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 TPL Plastech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gokul Refoils and TPL Plastech.

Diversification Opportunities for Gokul Refoils and TPL Plastech

0.06

Correlation Coefficient

Gokul Refoils  TPL Plastech

Significant diversification

The 3 months correlation between Gokul and TPL is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gokul Refoils and and TPL Plastech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPL Plastech Limited 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 TPL Plastech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPL Plastech Limited has no effect on the direction of Gokul Refoils i.e., Gokul Refoils and TPL Plastech go up and down completely randomly.

Pair Corralation between Gokul Refoils and TPL Plastech

Assuming the 90 days trading horizon Gokul Refoils is expected to generate 2.56 times less return on investment than TPL Plastech. But when comparing it to its historical volatility, Gokul Refoils and is 1.15 times less risky than TPL Plastech. It trades about 0.04 of its potential returns per unit of risk. TPL Plastech Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,061  in TPL Plastech Limited on September 10, 2024 and sell it today you would earn a total of  7,817  from holding TPL Plastech Limited or generate 255.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Gokul Refoils and  vs.  TPL Plastech Limited

Gokul Refoils

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gokul Refoils and are ranked lower than 6 (%) 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.

TPL Plastech Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TPL Plastech Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TPL Plastech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gokul Refoils and TPL Plastech

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

The idea behind Gokul Refoils and and TPL Plastech 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.