Correlation Between Southern Petrochemicals and Gujarat Ambuja
Can any of the company-specific risk be diversified away by investing in both Southern Petrochemicals and Gujarat Ambuja 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 Southern Petrochemicals and Gujarat Ambuja into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Petrochemicals Industries and Gujarat Ambuja Exports, you can compare the effects of market volatilities on Southern Petrochemicals and Gujarat Ambuja 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 Southern Petrochemicals with a short position of Gujarat Ambuja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Petrochemicals and Gujarat Ambuja.
Diversification Opportunities for Southern Petrochemicals and Gujarat Ambuja
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Gujarat is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Southern Petrochemicals Indust and Gujarat Ambuja Exports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Ambuja Exports and Southern Petrochemicals 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 Southern Petrochemicals Industries are associated (or correlated) with Gujarat Ambuja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Ambuja Exports has no effect on the direction of Southern Petrochemicals i.e., Southern Petrochemicals and Gujarat Ambuja go up and down completely randomly.
Pair Corralation between Southern Petrochemicals and Gujarat Ambuja
Assuming the 90 days trading horizon Southern Petrochemicals Industries is expected to generate 0.86 times more return on investment than Gujarat Ambuja. However, Southern Petrochemicals Industries is 1.16 times less risky than Gujarat Ambuja. It trades about 0.03 of its potential returns per unit of risk. Gujarat Ambuja Exports is currently generating about -0.14 per unit of risk. If you would invest 7,579 in Southern Petrochemicals Industries on November 4, 2024 and sell it today you would earn a total of 98.00 from holding Southern Petrochemicals Industries or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Petrochemicals Indust vs. Gujarat Ambuja Exports
Performance |
| Timeline |
| Southern Petrochemicals |
| Gujarat Ambuja Exports |
Southern Petrochemicals and Gujarat Ambuja Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Petrochemicals and Gujarat Ambuja
The main advantage of trading using opposite Southern Petrochemicals and Gujarat Ambuja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Petrochemicals position performs unexpectedly, Gujarat Ambuja 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 Gujarat Ambuja will offset losses from the drop in Gujarat Ambuja's long position.| Southern Petrochemicals vs. NMDC Limited | Southern Petrochemicals vs. Steel Authority of | Southern Petrochemicals vs. Embassy Office Parks | Southern Petrochemicals vs. Jai Balaji Industries |
| Gujarat Ambuja vs. Neogen Chemicals Limited | Gujarat Ambuja vs. Zuari Agro Chemicals | Gujarat Ambuja vs. Total Transport Systems | Gujarat Ambuja vs. Tainwala Chemical and |
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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