Correlation Between Ankit Metal and Tilaknagar Industries

Can any of the company-specific risk be diversified away by investing in both Ankit Metal and Tilaknagar Industries 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 Tilaknagar Industries 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 Tilaknagar Industries Limited, you can compare the effects of market volatilities on Ankit Metal and Tilaknagar Industries 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 Tilaknagar Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ankit Metal and Tilaknagar Industries.

Diversification Opportunities for Ankit Metal and Tilaknagar Industries

0.46

Correlation Coefficient

Ankit Metal  Tilaknagar Industries

Very weak diversification

The 3 months correlation between Ankit and Tilaknagar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ankit Metal Power and Tilaknagar Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilaknagar Industries 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 Tilaknagar Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilaknagar Industries has no effect on the direction of Ankit Metal i.e., Ankit Metal and Tilaknagar Industries go up and down completely randomly.

Pair Corralation between Ankit Metal and Tilaknagar Industries

Assuming the 90 days trading horizon Ankit Metal is expected to generate 1.5 times less return on investment than Tilaknagar Industries. But when comparing it to its historical volatility, Ankit Metal Power is 1.12 times less risky than Tilaknagar Industries. It trades about 0.12 of its potential returns per unit of risk. Tilaknagar Industries Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  30,355  in Tilaknagar Industries Limited on October 8, 2024 and sell it today you would earn a total of  11,575  from holding Tilaknagar Industries Limited or generate 38.13% return on investment over 90 days.

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

Ankit Metal Power  vs.  Tilaknagar Industries Limited

Ankit Metal Power

Risk-Adjusted Performance

9 of 100

Good

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.

Tilaknagar Industries

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tilaknagar Industries Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Tilaknagar Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ankit Metal and Tilaknagar Industries

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

The idea behind Ankit Metal Power and Tilaknagar Industries 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.