Correlation Between GTL and Bharat Road
Can any of the company-specific risk be diversified away by investing in both GTL and Bharat Road 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 Bharat Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GTL Limited and Bharat Road Network, you can compare the effects of market volatilities on GTL and Bharat Road 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 Bharat Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTL and Bharat Road.
Diversification Opportunities for GTL and Bharat Road
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GTL and Bharat is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GTL Limited and Bharat Road Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bharat Road Network 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 Bharat Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bharat Road Network has no effect on the direction of GTL i.e., GTL and Bharat Road go up and down completely randomly.
Pair Corralation between GTL and Bharat Road
Assuming the 90 days trading horizon GTL Limited is expected to generate 1.55 times more return on investment than Bharat Road. However, GTL is 1.55 times more volatile than Bharat Road Network. It trades about 0.04 of its potential returns per unit of risk. Bharat Road Network is currently generating about -0.04 per unit of risk. If you would invest 1,275 in GTL Limited on August 31, 2024 and sell it today you would earn a total of 22.00 from holding GTL Limited or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GTL Limited vs. Bharat Road Network
Performance |
| Timeline |
| GTL Limited |
| Bharat Road Network |
GTL and Bharat Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GTL and Bharat Road
The main advantage of trading using opposite GTL and Bharat Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTL position performs unexpectedly, Bharat Road 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 Bharat Road will offset losses from the drop in Bharat Road's long position.| GTL vs. UTI Asset Management | GTL vs. Reliance Communications Limited | GTL vs. Melstar Information Technologies | GTL vs. Hathway Cable Datacom |
| Bharat Road vs. Kingfa Science Technology | Bharat Road vs. GTL Limited | Bharat Road vs. Indo Amines Limited | Bharat Road vs. HDFC Mutual Fund |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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