Correlation Between Gujarat Fluorochemicals and Bajaj Holdings
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By analyzing existing cross correlation between Gujarat Fluorochemicals Limited and Bajaj Holdings Investment, you can compare the effects of market volatilities on Gujarat Fluorochemicals and Bajaj Holdings 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 Gujarat Fluorochemicals with a short position of Bajaj Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Fluorochemicals and Bajaj Holdings.
Diversification Opportunities for Gujarat Fluorochemicals and Bajaj Holdings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gujarat and Bajaj is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Fluorochemicals Limite and Bajaj Holdings Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bajaj Holdings Investment and Gujarat Fluorochemicals 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 Gujarat Fluorochemicals Limited are associated (or correlated) with Bajaj Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bajaj Holdings Investment has no effect on the direction of Gujarat Fluorochemicals i.e., Gujarat Fluorochemicals and Bajaj Holdings go up and down completely randomly.
Pair Corralation between Gujarat Fluorochemicals and Bajaj Holdings
Assuming the 90 days trading horizon Gujarat Fluorochemicals Limited is expected to under-perform the Bajaj Holdings. In addition to that, Gujarat Fluorochemicals is 1.17 times more volatile than Bajaj Holdings Investment. It trades about -0.14 of its total potential returns per unit of risk. Bajaj Holdings Investment is currently generating about 0.13 per unit of volatility. If you would invest 1,020,300 in Bajaj Holdings Investment on August 28, 2024 and sell it today you would earn a total of 38,855 from holding Bajaj Holdings Investment or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Gujarat Fluorochemicals Limite vs. Bajaj Holdings Investment
Performance |
| Timeline |
| Gujarat Fluorochemicals |
| Bajaj Holdings Investment |
Gujarat Fluorochemicals and Bajaj Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gujarat Fluorochemicals and Bajaj Holdings
The main advantage of trading using opposite Gujarat Fluorochemicals and Bajaj Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gujarat Fluorochemicals position performs unexpectedly, Bajaj Holdings 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 Bajaj Holdings will offset losses from the drop in Bajaj Holdings' long position.The idea behind Gujarat Fluorochemicals Limited and Bajaj Holdings Investment 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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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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