Correlation Between Ankit Metal and Thirumalai Chemicals

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

Diversification Opportunities for Ankit Metal and Thirumalai Chemicals

0.07

Correlation Coefficient

Ankit Metal  Thirumalai Chemicals

Significant diversification

The 3 months correlation between Ankit and Thirumalai is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ankit Metal Power and Thirumalai Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thirumalai Chemicals 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 Thirumalai Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thirumalai Chemicals has no effect on the direction of Ankit Metal i.e., Ankit Metal and Thirumalai Chemicals go up and down completely randomly.

Pair Corralation between Ankit Metal and Thirumalai Chemicals

Assuming the 90 days trading horizon Ankit Metal is expected to generate 5.12 times less return on investment than Thirumalai Chemicals. But when comparing it to its historical volatility, Ankit Metal Power is 1.02 times less risky than Thirumalai Chemicals. It trades about 0.02 of its potential returns per unit of risk. Thirumalai Chemicals Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  19,924  in Thirumalai Chemicals Limited on September 21, 2024 and sell it today you would earn a total of  14,551  from holding Thirumalai Chemicals Limited or generate 73.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.25%
Values	Daily Returns

Ankit Metal Power  vs.  Thirumalai Chemicals Limited

Ankit Metal Power

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ankit Metal Power are ranked lower than 12 (%) 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.

Thirumalai Chemicals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thirumalai Chemicals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Thirumalai Chemicals is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ankit Metal and Thirumalai Chemicals

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

The idea behind Ankit Metal Power and Thirumalai Chemicals 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.