Correlation Between Astar and Mangalam Organics

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

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

Diversification Opportunities for Astar and Mangalam Organics

-0.31

Correlation Coefficient

Astar  Mangalam Organics

Very good diversification

The 3 months correlation between Astar and Mangalam is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Mangalam Organics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangalam Organics and Astar 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 Astar are associated (or correlated) with Mangalam Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangalam Organics has no effect on the direction of Astar i.e., Astar and Mangalam Organics go up and down completely randomly.

Pair Corralation between Astar and Mangalam Organics

Assuming the 90 days trading horizon Astar is expected to under-perform the Mangalam Organics. In addition to that, Astar is 1.86 times more volatile than Mangalam Organics Limited. It trades about -0.15 of its total potential returns per unit of risk. Mangalam Organics Limited is currently generating about -0.02 per unit of volatility. If you would invest  42,110  in Mangalam Organics Limited on October 25, 2024 and sell it today you would lose (590.00) from holding Mangalam Organics Limited or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Astar  vs.  Mangalam Organics Limited

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mangalam Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangalam Organics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat 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 Astar and Mangalam Organics

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

The idea behind Astar and Mangalam Organics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..