Correlation Between Ankit Metal and Thermax

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

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

Diversification Opportunities for Ankit Metal and Thermax

-0.59

Correlation Coefficient

Ankit Metal  Thermax

Excellent diversification

The 3 months correlation between Ankit and Thermax is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ankit Metal Power and Thermax Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermax Limited and Ankit Metal 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 Ankit Metal Power are associated (or correlated) with Thermax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermax Limited has no effect on the direction of Ankit Metal i.e., Ankit Metal and Thermax go up and down completely randomly.

Pair Corralation between Ankit Metal and Thermax

Assuming the 90 days trading horizon Ankit Metal Power is expected to generate 1.26 times more return on investment than Thermax. However, Ankit Metal is 1.26 times more volatile than Thermax Limited. It trades about 0.28 of its potential returns per unit of risk. Thermax Limited is currently generating about -0.29 per unit of risk. If you would invest  370.00  in Ankit Metal Power on October 10, 2024 and sell it today you would earn a total of  68.00  from holding Ankit Metal Power or generate 18.38% return on investment over 90 days.

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

Ankit Metal Power  vs.  Thermax Limited

Ankit Metal Power

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ankit Metal Power are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ankit Metal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Thermax Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermax Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ankit Metal and Thermax

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

The idea behind Ankit Metal Power and Thermax 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.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.