Correlation Between Melewar Industrial and Rubberex M

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

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

Diversification Opportunities for Melewar Industrial and Rubberex M

0.91

Correlation Coefficient

Melewar Industrial  Rubberex M

Almost no diversification

The 3 months correlation between Melewar and Rubberex is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Melewar Industrial Group and Rubberex M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubberex M and Melewar Industrial 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 Melewar Industrial Group are associated (or correlated) with Rubberex M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubberex M has no effect on the direction of Melewar Industrial i.e., Melewar Industrial and Rubberex M go up and down completely randomly.

Pair Corralation between Melewar Industrial and Rubberex M

Assuming the 90 days trading horizon Melewar Industrial Group is expected to under-perform the Rubberex M. But the stock apears to be less risky and, when comparing its historical volatility, Melewar Industrial Group is 1.55 times less risky than Rubberex M. The stock trades about -0.15 of its potential returns per unit of risk. The Rubberex M is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Rubberex M on December 25, 2024 and sell it today you would lose (4.00) from holding Rubberex M or give up 22.22% of portfolio value over 90 days.

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

Melewar Industrial Group  vs.  Rubberex M

Melewar Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Melewar Industrial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rubberex M

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rubberex M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Melewar Industrial and Rubberex M

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

The idea behind Melewar Industrial Group and Rubberex M 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.