Correlation Between Gujarat Lease and City Union
Can any of the company-specific risk be diversified away by investing in both Gujarat Lease and City Union 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 Gujarat Lease and City Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gujarat Lease Financing and City Union Bank, you can compare the effects of market volatilities on Gujarat Lease and City Union 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 Lease with a short position of City Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Lease and City Union.
Diversification Opportunities for Gujarat Lease and City Union
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gujarat and City is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Lease Financing and City Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Union Bank and Gujarat Lease 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 Lease Financing are associated (or correlated) with City Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Union Bank has no effect on the direction of Gujarat Lease i.e., Gujarat Lease and City Union go up and down completely randomly.
Pair Corralation between Gujarat Lease and City Union
Assuming the 90 days trading horizon Gujarat Lease Financing is expected to generate 2.02 times more return on investment than City Union. However, Gujarat Lease is 2.02 times more volatile than City Union Bank. It trades about 0.48 of its potential returns per unit of risk. City Union Bank is currently generating about 0.1 per unit of risk. If you would invest 735.00 in Gujarat Lease Financing on September 5, 2024 and sell it today you would earn a total of 206.00 from holding Gujarat Lease Financing or generate 28.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gujarat Lease Financing vs. City Union Bank
Performance |
| Timeline |
| Gujarat Lease Financing |
| City Union Bank |
Gujarat Lease and City Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gujarat Lease and City Union
The main advantage of trading using opposite Gujarat Lease and City Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gujarat Lease position performs unexpectedly, City Union 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 City Union will offset losses from the drop in City Union's long position.| Gujarat Lease vs. MRF Limited | Gujarat Lease vs. JSW Holdings Limited | Gujarat Lease vs. Maharashtra Scooters Limited | Gujarat Lease vs. Vardhman Holdings Limited |
| City Union vs. Hisar Metal Industries | City Union vs. Indraprastha Medical | City Union vs. Shyam Metalics and | City Union vs. Gujarat Lease Financing |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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