Correlation Between Gujarat Fluorochemicals and India Glycols
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By analyzing existing cross correlation between Gujarat Fluorochemicals Limited and India Glycols Limited, you can compare the effects of market volatilities on Gujarat Fluorochemicals and India Glycols 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 India Glycols. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Fluorochemicals and India Glycols.
Diversification Opportunities for Gujarat Fluorochemicals and India Glycols
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gujarat and India is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Fluorochemicals Limite and India Glycols Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Glycols Limited 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 India Glycols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Glycols Limited has no effect on the direction of Gujarat Fluorochemicals i.e., Gujarat Fluorochemicals and India Glycols go up and down completely randomly.
Pair Corralation between Gujarat Fluorochemicals and India Glycols
Assuming the 90 days trading horizon Gujarat Fluorochemicals Limited is expected to under-perform the India Glycols. But the stock apears to be less risky and, when comparing its historical volatility, Gujarat Fluorochemicals Limited is 1.85 times less risky than India Glycols. The stock trades about -0.25 of its potential returns per unit of risk. The India Glycols Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 119,840 in India Glycols Limited on September 1, 2024 and sell it today you would earn a total of 7,755 from holding India Glycols Limited or generate 6.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gujarat Fluorochemicals Limite vs. India Glycols Limited
Performance |
| Timeline |
| Gujarat Fluorochemicals |
| India Glycols Limited |
Gujarat Fluorochemicals and India Glycols Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gujarat Fluorochemicals and India Glycols
The main advantage of trading using opposite Gujarat Fluorochemicals and India Glycols positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gujarat Fluorochemicals position performs unexpectedly, India Glycols 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 India Glycols will offset losses from the drop in India Glycols' long position.The idea behind Gujarat Fluorochemicals Limited and India Glycols 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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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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