Correlation Between UFO Moviez and GM Breweries

Can any of the company-specific risk be diversified away by investing in both UFO Moviez and GM Breweries 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 UFO Moviez and GM Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UFO Moviez India and GM Breweries Limited, you can compare the effects of market volatilities on UFO Moviez and GM Breweries 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 UFO Moviez with a short position of GM Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of UFO Moviez and GM Breweries.

Diversification Opportunities for UFO Moviez and GM Breweries

0.85

Correlation Coefficient

UFO Moviez  GM Breweries

Very poor diversification

The 3 months correlation between UFO and GMBREW is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding UFO Moviez India and GM Breweries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GM Breweries Limited and UFO Moviez 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 UFO Moviez India are associated (or correlated) with GM Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GM Breweries Limited has no effect on the direction of UFO Moviez i.e., UFO Moviez and GM Breweries go up and down completely randomly.

Pair Corralation between UFO Moviez and GM Breweries

Assuming the 90 days trading horizon UFO Moviez India is expected to under-perform the GM Breweries. But the stock apears to be less risky and, when comparing its historical volatility, UFO Moviez India is 1.19 times less risky than GM Breweries. The stock trades about -0.11 of its potential returns per unit of risk. The GM Breweries Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  90,200  in GM Breweries Limited on September 12, 2024 and sell it today you would lose (6,835) from holding GM Breweries Limited or give up 7.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

UFO Moviez India  vs.  GM Breweries Limited

UFO Moviez India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UFO Moviez India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GM Breweries Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GM Breweries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GM Breweries is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UFO Moviez and GM Breweries

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

The idea behind UFO Moviez India and GM Breweries 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 Transaction History module to view history of all your transactions and understand their impact on performance.