Correlation Between G Tec and Indo Borax

Can any of the company-specific risk be diversified away by investing in both G Tec and Indo Borax 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 Indo Borax 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 Indo Borax Chemicals, you can compare the effects of market volatilities on G Tec and Indo Borax 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 Indo Borax. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Tec and Indo Borax.

Diversification Opportunities for G Tec and Indo Borax

0.72

Correlation Coefficient

G Tec  Indo Borax

Poor diversification

The 3 months correlation between GTECJAINX and Indo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and Indo Borax Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Borax Chemicals 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 Indo Borax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Borax Chemicals has no effect on the direction of G Tec i.e., G Tec and Indo Borax go up and down completely randomly.

Pair Corralation between G Tec and Indo Borax

Assuming the 90 days trading horizon G Tec Jainx Education is expected to under-perform the Indo Borax. But the stock apears to be less risky and, when comparing its historical volatility, G Tec Jainx Education is 1.07 times less risky than Indo Borax. The stock trades about -0.4 of its potential returns per unit of risk. The Indo Borax Chemicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  20,163  in Indo Borax Chemicals on September 4, 2024 and sell it today you would earn a total of  229.00  from holding Indo Borax Chemicals or generate 1.14% return on investment over 90 days.

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

G Tec Jainx Education  vs.  Indo Borax Chemicals

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 inconsistent 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.

Indo Borax Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with G Tec and Indo Borax

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

The idea behind G Tec Jainx Education and Indo Borax Chemicals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.