Correlation Between V Mart and Gokul Refoils

Can any of the company-specific risk be diversified away by investing in both V Mart and Gokul Refoils 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 V Mart and Gokul Refoils into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between V Mart Retail Limited and Gokul Refoils and, you can compare the effects of market volatilities on V Mart and Gokul Refoils 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 V Mart with a short position of Gokul Refoils. Check out your portfolio center. Please also check ongoing floating volatility patterns of V Mart and Gokul Refoils.

Diversification Opportunities for V Mart and Gokul Refoils

-0.31

Correlation Coefficient

V Mart  Gokul Refoils

Very good diversification

The 3 months correlation between VMART and Gokul is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding V Mart Retail Limited and Gokul Refoils and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gokul Refoils and V Mart 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 V Mart Retail Limited are associated (or correlated) with Gokul Refoils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gokul Refoils has no effect on the direction of V Mart i.e., V Mart and Gokul Refoils go up and down completely randomly.

Pair Corralation between V Mart and Gokul Refoils

Assuming the 90 days trading horizon V Mart is expected to generate 4.1 times less return on investment than Gokul Refoils. But when comparing it to its historical volatility, V Mart Retail Limited is 1.04 times less risky than Gokul Refoils. It trades about 0.03 of its potential returns per unit of risk. Gokul Refoils and is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,337  in Gokul Refoils and on September 19, 2024 and sell it today you would earn a total of  1,017  from holding Gokul Refoils and or generate 19.06% return on investment over 90 days.

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

V Mart Retail Limited  vs.  Gokul Refoils and

V Mart Retail

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in V Mart Retail Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, V Mart is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Gokul Refoils

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gokul Refoils and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Gokul Refoils displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with V Mart and Gokul Refoils

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

The idea behind V Mart Retail Limited and Gokul Refoils and 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.