Correlation Between Golden Tobacco and ITI

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Can any of the company-specific risk be diversified away by investing in both Golden Tobacco and ITI 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 Golden Tobacco and ITI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Tobacco Limited and ITI Limited, you can compare the effects of market volatilities on Golden Tobacco and ITI 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 Golden Tobacco with a short position of ITI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Tobacco and ITI.

Diversification Opportunities for Golden Tobacco and ITI

GoldenITIDiversified AwayGoldenITIDiversified Away100%
-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Golden and ITI is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Golden Tobacco Limited and ITI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITI Limited and Golden Tobacco 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 Golden Tobacco Limited are associated (or correlated) with ITI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITI Limited has no effect on the direction of Golden Tobacco i.e., Golden Tobacco and ITI go up and down completely randomly.

Pair Corralation between Golden Tobacco and ITI

Assuming the 90 days trading horizon Golden Tobacco Limited is expected to under-perform the ITI. But the stock apears to be less risky and, when comparing its historical volatility, Golden Tobacco Limited is 1.69 times less risky than ITI. The stock trades about -0.01 of its potential returns per unit of risk. The ITI Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  30,555  in ITI Limited on November 24, 2024 and sell it today you would lose (2,290) from holding ITI Limited or give up 7.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Golden Tobacco Limited  vs.  ITI Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 020406080100
JavaScript chart by amCharts 3.21.15GOLDENTOBC ITI
       Timeline  
Golden Tobacco 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Golden Tobacco Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Golden Tobacco is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb36373839404142434445
ITI Limited 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ITI Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, ITI may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb250300350400450500550600

Golden Tobacco and ITI Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.92-3.68-2.45-1.21-0.011.192.423.654.886.11 0.0100.0150.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15GOLDENTOBC ITI
       Returns  

Pair Trading with Golden Tobacco and ITI

The main advantage of trading using opposite Golden Tobacco and ITI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Tobacco position performs unexpectedly, ITI 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 ITI will offset losses from the drop in ITI's long position.
The idea behind Golden Tobacco Limited and ITI 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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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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