Correlation Between Golden Tobacco and Meghmani Organics

Can any of the company-specific risk be diversified away by investing in both Golden Tobacco and Meghmani Organics 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 Golden Tobacco and Meghmani Organics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Tobacco Limited and Meghmani Organics Limited, you can compare the effects of market volatilities on Golden Tobacco and Meghmani Organics 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 Golden Tobacco with a short position of Meghmani Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Tobacco and Meghmani Organics.

Diversification Opportunities for Golden Tobacco and Meghmani Organics

-0.02

Correlation Coefficient

Golden Tobacco  Meghmani Organics

Good diversification

The 3 months correlation between Golden and Meghmani is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Golden Tobacco Limited and Meghmani Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meghmani Organics and Golden Tobacco 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 Golden Tobacco Limited are associated (or correlated) with Meghmani Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meghmani Organics has no effect on the direction of Golden Tobacco i.e., Golden Tobacco and Meghmani Organics go up and down completely randomly.

Pair Corralation between Golden Tobacco and Meghmani Organics

Assuming the 90 days trading horizon Golden Tobacco is expected to generate 11.88 times less return on investment than Meghmani Organics. In addition to that, Golden Tobacco is 1.08 times more volatile than Meghmani Organics Limited. It trades about 0.02 of its total potential returns per unit of risk. Meghmani Organics Limited is currently generating about 0.22 per unit of volatility. If you would invest  7,085  in Meghmani Organics Limited on April 25, 2025 and sell it today you would earn a total of  2,774  from holding Meghmani Organics Limited or generate 39.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Golden Tobacco Limited  vs.  Meghmani Organics Limited

Golden Tobacco

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Tobacco Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Golden Tobacco is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Meghmani Organics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meghmani Organics Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Meghmani Organics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Tobacco and Meghmani Organics

The main advantage of trading using opposite Golden Tobacco and Meghmani Organics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Tobacco position performs unexpectedly, Meghmani Organics 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 Meghmani Organics will offset losses from the drop in Meghmani Organics' long position.

The idea behind Golden Tobacco Limited and Meghmani Organics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.