Correlation Between G Tec and MIRC Electronics

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

Diversification Opportunities for G Tec and MIRC Electronics

0.64

Correlation Coefficient

G Tec  MIRC Electronics

Poor diversification

The 3 months correlation between GTECJAINX and MIRC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and MIRC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRC Electronics 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 MIRC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRC Electronics has no effect on the direction of G Tec i.e., G Tec and MIRC Electronics go up and down completely randomly.

Pair Corralation between G Tec and MIRC Electronics

Assuming the 90 days trading horizon G Tec is expected to generate 3.03 times less return on investment than MIRC Electronics. But when comparing it to its historical volatility, G Tec Jainx Education is 1.05 times less risky than MIRC Electronics. It trades about 0.09 of its potential returns per unit of risk. MIRC Electronics Limited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,950  in MIRC Electronics Limited on September 23, 2024 and sell it today you would earn a total of  368.00  from holding MIRC Electronics Limited or generate 18.87% 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.  MIRC Electronics Limited

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.

MIRC Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIRC Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, MIRC Electronics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with G Tec and MIRC Electronics

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

The idea behind G Tec Jainx Education and MIRC Electronics 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.