Correlation Between Welspun Corp and Ganesh Housing

Can any of the company-specific risk be diversified away by investing in both Welspun Corp and Ganesh Housing 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 Welspun Corp and Ganesh Housing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Welspun Corp Limited and Ganesh Housing, you can compare the effects of market volatilities on Welspun Corp and Ganesh Housing 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 Welspun Corp with a short position of Ganesh Housing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welspun Corp and Ganesh Housing.

Diversification Opportunities for Welspun Corp and Ganesh Housing

0.73

Correlation Coefficient

Welspun Corp  Ganesh Housing

Poor diversification

The 3 months correlation between Welspun and Ganesh is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Welspun Corp Limited and Ganesh Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganesh Housing and Welspun Corp 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 Welspun Corp Limited are associated (or correlated) with Ganesh Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganesh Housing has no effect on the direction of Welspun Corp i.e., Welspun Corp and Ganesh Housing go up and down completely randomly.

Pair Corralation between Welspun Corp and Ganesh Housing

Assuming the 90 days trading horizon Welspun Corp is expected to generate 2.54 times less return on investment than Ganesh Housing. But when comparing it to its historical volatility, Welspun Corp Limited is 1.45 times less risky than Ganesh Housing. It trades about 0.09 of its potential returns per unit of risk. Ganesh Housing is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  87,650  in Ganesh Housing on September 23, 2024 and sell it today you would earn a total of  31,170  from holding Ganesh Housing or generate 35.56% return on investment over 90 days.

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

Welspun Corp Limited  vs.  Ganesh Housing

Welspun Corp Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Welspun Corp Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Welspun Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Ganesh Housing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ganesh Housing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Ganesh Housing demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Welspun Corp and Ganesh Housing

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

The idea behind Welspun Corp Limited and Ganesh Housing 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.