Correlation Between G Tec and Kotak Mahindra

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

Diversification Opportunities for G Tec and Kotak Mahindra

0.75

Correlation Coefficient

G Tec  Kotak Mahindra

Poor diversification

The 3 months correlation between GTECJAINX and Kotak is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and Kotak Mahindra Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kotak Mahindra Bank 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 Kotak Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kotak Mahindra Bank has no effect on the direction of G Tec i.e., G Tec and Kotak Mahindra go up and down completely randomly.

Pair Corralation between G Tec and Kotak Mahindra

Assuming the 90 days trading horizon G Tec Jainx Education is expected to under-perform the Kotak Mahindra. In addition to that, G Tec is 2.65 times more volatile than Kotak Mahindra Bank. It trades about -0.21 of its total potential returns per unit of risk. Kotak Mahindra Bank is currently generating about -0.09 per unit of volatility. If you would invest  190,930  in Kotak Mahindra Bank on September 20, 2024 and sell it today you would lose (12,930) from holding Kotak Mahindra Bank or give up 6.77% of portfolio value over 90 days.

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

G Tec Jainx Education  vs.  Kotak Mahindra Bank

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 uncertain 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.

Kotak Mahindra Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kotak Mahindra Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with G Tec and Kotak Mahindra

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

The idea behind G Tec Jainx Education and Kotak Mahindra Bank 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..