Correlation Between Silgo Retail and Gangotri Textiles

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

Diversification Opportunities for Silgo Retail and Gangotri Textiles

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Silgo and Gangotri is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Silgo Retail Limited and Gangotri Textiles Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gangotri Textiles and Silgo Retail 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 Silgo Retail Limited 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 Silgo Retail i.e., Silgo Retail and Gangotri Textiles go up and down completely randomly.

Pair Corralation between Silgo Retail and Gangotri Textiles

Assuming the 90 days trading horizon Silgo Retail Limited is expected to under-perform the Gangotri Textiles. In addition to that, Silgo Retail is 1.9 times more volatile than Gangotri Textiles Limited. It trades about -0.1 of its total potential returns per unit of risk. Gangotri Textiles Limited is currently generating about 0.02 per unit of volatility. If you would invest  114.00  in Gangotri Textiles Limited on October 26, 2024 and sell it today you would earn a total of  1.00  from holding Gangotri Textiles Limited or generate 0.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Silgo Retail Limited  vs.  Gangotri Textiles Limited

 Performance 
       Timeline  
Silgo Retail Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Silgo Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Gangotri Textiles 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Gangotri Textiles Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Gangotri Textiles is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Silgo Retail and Gangotri Textiles Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Silgo Retail and Gangotri Textiles

The main advantage of trading using opposite Silgo Retail and Gangotri Textiles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silgo Retail 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.
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The idea behind Silgo Retail Limited 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.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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