Correlation Between Bajaj Holdings and Dynamatic Technologies

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

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

Diversification Opportunities for Bajaj Holdings and Dynamatic Technologies

-0.24

Correlation Coefficient

Bajaj Holdings  Dynamatic Technologies

Very good diversification

The 3 months correlation between Bajaj and Dynamatic is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Holdings Investment and Dynamatic Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamatic Technologies and Bajaj Holdings 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 Bajaj Holdings Investment are associated (or correlated) with Dynamatic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamatic Technologies has no effect on the direction of Bajaj Holdings i.e., Bajaj Holdings and Dynamatic Technologies go up and down completely randomly.

Pair Corralation between Bajaj Holdings and Dynamatic Technologies

Assuming the 90 days trading horizon Bajaj Holdings Investment is expected to generate 0.93 times more return on investment than Dynamatic Technologies. However, Bajaj Holdings Investment is 1.07 times less risky than Dynamatic Technologies. It trades about -0.01 of its potential returns per unit of risk. Dynamatic Technologies Limited is currently generating about -0.17 per unit of risk. If you would invest  1,297,000  in Bajaj Holdings Investment on December 29, 2024 and sell it today you would lose (49,695) from holding Bajaj Holdings Investment or give up 3.83% of portfolio value over 90 days.

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

Bajaj Holdings Investment  vs.  Dynamatic Technologies Limited

Bajaj Holdings Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bajaj Holdings Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Bajaj Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Dynamatic Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynamatic Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bajaj Holdings and Dynamatic Technologies

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

The idea behind Bajaj Holdings Investment and Dynamatic Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.