Correlation Between Garware Hi and Nahar Industrial

Can any of the company-specific risk be diversified away by investing in both Garware Hi and Nahar Industrial 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 Garware Hi and Nahar Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garware Hi Tech Films and Nahar Industrial Enterprises, you can compare the effects of market volatilities on Garware Hi and Nahar Industrial 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 Garware Hi with a short position of Nahar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garware Hi and Nahar Industrial.

Diversification Opportunities for Garware Hi and Nahar Industrial

-0.77

Correlation Coefficient

Garware Hi  Nahar Industrial

Pay attention - limited upside

The 3 months correlation between Garware and Nahar is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Garware Hi Tech Films and Nahar Industrial Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nahar Industrial Ent and Garware Hi 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 Garware Hi Tech Films are associated (or correlated) with Nahar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nahar Industrial Ent has no effect on the direction of Garware Hi i.e., Garware Hi and Nahar Industrial go up and down completely randomly.

Pair Corralation between Garware Hi and Nahar Industrial

Assuming the 90 days trading horizon Garware Hi Tech Films is expected to generate 2.08 times more return on investment than Nahar Industrial. However, Garware Hi is 2.08 times more volatile than Nahar Industrial Enterprises. It trades about 0.19 of its potential returns per unit of risk. Nahar Industrial Enterprises is currently generating about -0.08 per unit of risk. If you would invest  323,656  in Garware Hi Tech Films on September 2, 2024 and sell it today you would earn a total of  170,049  from holding Garware Hi Tech Films or generate 52.54% return on investment over 90 days.

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

Garware Hi Tech Films  vs.  Nahar Industrial Enterprises

Garware Hi Tech

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nahar Industrial Ent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nahar Industrial Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Garware Hi and Nahar Industrial

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

The idea behind Garware Hi Tech Films and Nahar Industrial Enterprises 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.