Correlation Between Eastern Power and Gunkul Engineering
Can any of the company-specific risk be diversified away by investing in both Eastern Power and Gunkul Engineering 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 Eastern Power and Gunkul Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Power Group and Gunkul Engineering Public, you can compare the effects of market volatilities on Eastern Power and Gunkul Engineering 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 Eastern Power with a short position of Gunkul Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Power and Gunkul Engineering.
Diversification Opportunities for Eastern Power and Gunkul Engineering
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and Gunkul is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Power Group and Gunkul Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunkul Engineering Public and Eastern Power 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 Eastern Power Group are associated (or correlated) with Gunkul Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunkul Engineering Public has no effect on the direction of Eastern Power i.e., Eastern Power and Gunkul Engineering go up and down completely randomly.
Pair Corralation between Eastern Power and Gunkul Engineering
Assuming the 90 days horizon Eastern Power Group is expected to under-perform the Gunkul Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Power Group is 1.61 times less risky than Gunkul Engineering. The stock trades about -0.34 of its potential returns per unit of risk. The Gunkul Engineering Public is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 230.00 in Gunkul Engineering Public on October 10, 2024 and sell it today you would lose (18.00) from holding Gunkul Engineering Public or give up 7.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Eastern Power Group vs. Gunkul Engineering Public
Performance |
| Timeline |
| Eastern Power Group |
| Gunkul Engineering Public |
Eastern Power and Gunkul Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Power and Gunkul Engineering
The main advantage of trading using opposite Eastern Power and Gunkul Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Power position performs unexpectedly, Gunkul Engineering 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 Gunkul Engineering will offset losses from the drop in Gunkul Engineering's long position.| Eastern Power vs. Gunkul Engineering Public | Eastern Power vs. CK Power Public | Eastern Power vs. WHA Public | Eastern Power vs. Energy Absolute Public |
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Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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