Correlation Between GTL and Allied Blenders
Can any of the company-specific risk be diversified away by investing in both GTL and Allied Blenders 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 GTL and Allied Blenders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GTL Limited and Allied Blenders Distillers, you can compare the effects of market volatilities on GTL and Allied Blenders 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 GTL with a short position of Allied Blenders. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTL and Allied Blenders.
Diversification Opportunities for GTL and Allied Blenders
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GTL and Allied is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GTL Limited and Allied Blenders Distillers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Blenders Dist and GTL 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 GTL Limited are associated (or correlated) with Allied Blenders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Blenders Dist has no effect on the direction of GTL i.e., GTL and Allied Blenders go up and down completely randomly.
Pair Corralation between GTL and Allied Blenders
Assuming the 90 days trading horizon GTL Limited is expected to generate 1.92 times more return on investment than Allied Blenders. However, GTL is 1.92 times more volatile than Allied Blenders Distillers. It trades about 0.0 of its potential returns per unit of risk. Allied Blenders Distillers is currently generating about -0.02 per unit of risk. If you would invest 1,373 in GTL Limited on September 2, 2024 and sell it today you would lose (86.00) from holding GTL Limited or give up 6.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GTL Limited vs. Allied Blenders Distillers
Performance |
| Timeline |
| GTL Limited |
| Allied Blenders Dist |
GTL and Allied Blenders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GTL and Allied Blenders
The main advantage of trading using opposite GTL and Allied Blenders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL position performs unexpectedly, Allied Blenders 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 Allied Blenders will offset losses from the drop in Allied Blenders' long position.| GTL vs. One 97 Communications | GTL vs. Paramount Communications Limited | GTL vs. OnMobile Global Limited | GTL vs. Elin Electronics Limited |
| Allied Blenders vs. United Spirits Limited | Allied Blenders vs. Radico Khaitan Limited | Allied Blenders vs. Tilaknagar Industries Limited | Allied Blenders vs. Globus Spirits Limited |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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