Correlation Between Golden Tobacco and Ratnamani Metals

Can any of the company-specific risk be diversified away by investing in both Golden Tobacco and Ratnamani Metals 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 Ratnamani Metals 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 Ratnamani Metals Tubes, you can compare the effects of market volatilities on Golden Tobacco and Ratnamani Metals 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 Ratnamani Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Tobacco and Ratnamani Metals.

Diversification Opportunities for Golden Tobacco and Ratnamani Metals

0.29

Correlation Coefficient

Golden Tobacco  Ratnamani Metals

Modest diversification

The 3 months correlation between Golden and Ratnamani is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Golden Tobacco Limited and Ratnamani Metals Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratnamani Metals Tubes 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 Ratnamani Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratnamani Metals Tubes has no effect on the direction of Golden Tobacco i.e., Golden Tobacco and Ratnamani Metals go up and down completely randomly.

Pair Corralation between Golden Tobacco and Ratnamani Metals

Assuming the 90 days trading horizon Golden Tobacco is expected to generate 1.5 times less return on investment than Ratnamani Metals. In addition to that, Golden Tobacco is 2.0 times more volatile than Ratnamani Metals Tubes. It trades about 0.02 of its total potential returns per unit of risk. Ratnamani Metals Tubes is currently generating about 0.05 per unit of volatility. If you would invest  267,890  in Ratnamani Metals Tubes on April 25, 2025 and sell it today you would earn a total of  10,520  from holding Ratnamani Metals Tubes or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Golden Tobacco Limited  vs.  Ratnamani Metals Tubes

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.

Ratnamani Metals Tubes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ratnamani Metals Tubes are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ratnamani Metals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Golden Tobacco and Ratnamani Metals

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

The idea behind Golden Tobacco Limited and Ratnamani Metals Tubes 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.