Correlation Between Gujarat Alkalies and Agarwal Industrial

Can any of the company-specific risk be diversified away by investing in both Gujarat Alkalies and Agarwal Industrial 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 Gujarat Alkalies and Agarwal Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gujarat Alkalies and and Agarwal Industrial, you can compare the effects of market volatilities on Gujarat Alkalies and Agarwal Industrial 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 Gujarat Alkalies with a short position of Agarwal Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gujarat Alkalies and Agarwal Industrial.

Diversification Opportunities for Gujarat Alkalies and Agarwal Industrial

0.63

Correlation Coefficient

Gujarat Alkalies  Agarwal Industrial

Poor diversification

The 3 months correlation between Gujarat and Agarwal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Alkalies and and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and Gujarat Alkalies 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 Gujarat Alkalies and are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of Gujarat Alkalies i.e., Gujarat Alkalies and Agarwal Industrial go up and down completely randomly.

Pair Corralation between Gujarat Alkalies and Agarwal Industrial

Assuming the 90 days trading horizon Gujarat Alkalies and is expected to under-perform the Agarwal Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Gujarat Alkalies and is 1.15 times less risky than Agarwal Industrial. The stock trades about -0.03 of its potential returns per unit of risk. The Agarwal Industrial is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  99,885  in Agarwal Industrial on April 25, 2025 and sell it today you would lose (3,105) from holding Agarwal Industrial or give up 3.11% of portfolio value over 90 days.

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

Gujarat Alkalies and  vs.  Agarwal Industrial

Gujarat Alkalies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gujarat Alkalies and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gujarat Alkalies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agarwal Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agarwal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Agarwal Industrial is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gujarat Alkalies and Agarwal Industrial

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

The idea behind Gujarat Alkalies and and Agarwal Industrial 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 CEOs Directory module to screen CEOs from public companies around the world.