Correlation Between G Tec and Indian Metals

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

By analyzing existing cross correlation between G Tec Jainx Education and Indian Metals Ferro, you can compare the effects of market volatilities on G Tec and Indian Metals 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 G Tec with a short position of Indian Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Tec and Indian Metals.

Diversification Opportunities for G Tec and Indian Metals

-0.7

Correlation Coefficient

G Tec  Indian Metals

Excellent diversification

The 3 months correlation between GTECJAINX and Indian is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and Indian Metals Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Metals Ferro and G Tec 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 G Tec Jainx Education are associated (or correlated) with Indian Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Metals Ferro has no effect on the direction of G Tec i.e., G Tec and Indian Metals go up and down completely randomly.

Pair Corralation between G Tec and Indian Metals

Assuming the 90 days trading horizon G Tec Jainx Education is expected to under-perform the Indian Metals. In addition to that, G Tec is 1.21 times more volatile than Indian Metals Ferro. It trades about -0.22 of its total potential returns per unit of risk. Indian Metals Ferro is currently generating about 0.23 per unit of volatility. If you would invest  66,049  in Indian Metals Ferro on September 21, 2024 and sell it today you would earn a total of  27,526  from holding Indian Metals Ferro or generate 41.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

G Tec Jainx Education  vs.  Indian Metals Ferro

G Tec Jainx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Tec Jainx Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Indian Metals Ferro

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Metals Ferro are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Indian Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Tec and Indian Metals

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

The idea behind G Tec Jainx Education and Indian Metals Ferro 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.