Correlation Between SBI Life and Gangotri Textiles
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By analyzing existing cross correlation between SBI Life Insurance and Gangotri Textiles Limited, you can compare the effects of market volatilities on SBI Life and Gangotri Textiles 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 SBI Life with a short position of Gangotri Textiles. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Life and Gangotri Textiles.
Diversification Opportunities for SBI Life and Gangotri Textiles
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SBI and Gangotri is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SBI Life Insurance and Gangotri Textiles Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gangotri Textiles and SBI Life 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 SBI Life Insurance are associated (or correlated) with Gangotri Textiles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gangotri Textiles has no effect on the direction of SBI Life i.e., SBI Life and Gangotri Textiles go up and down completely randomly.
Pair Corralation between SBI Life and Gangotri Textiles
Assuming the 90 days trading horizon SBI Life Insurance is expected to under-perform the Gangotri Textiles. But the stock apears to be less risky and, when comparing its historical volatility, SBI Life Insurance is 1.37 times less risky than Gangotri Textiles. The stock trades about -0.4 of its potential returns per unit of risk. The Gangotri Textiles Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 111.00 in Gangotri Textiles Limited on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Gangotri Textiles Limited or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
SBI Life Insurance vs. Gangotri Textiles Limited
Performance |
| Timeline |
| SBI Life Insurance |
| Gangotri Textiles |
SBI Life and Gangotri Textiles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Life and Gangotri Textiles
The main advantage of trading using opposite SBI Life and Gangotri Textiles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Life position performs unexpectedly, Gangotri Textiles 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 Gangotri Textiles will offset losses from the drop in Gangotri Textiles' long position.The idea behind SBI Life Insurance and Gangotri Textiles 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.| Gangotri Textiles vs. Hemisphere Properties India | Gangotri Textiles vs. India Glycols Limited | Gangotri Textiles vs. Indo Borax Chemicals | Gangotri Textiles vs. Kingfa Science Technology |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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