Correlation Between Bajaj Holdings and Manaksia Coated

Can any of the company-specific risk be diversified away by investing in both Bajaj Holdings and Manaksia Coated 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 Manaksia Coated 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 Manaksia Coated Metals, you can compare the effects of market volatilities on Bajaj Holdings and Manaksia Coated 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 Manaksia Coated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bajaj Holdings and Manaksia Coated.

Diversification Opportunities for Bajaj Holdings and Manaksia Coated

0.71

Correlation Coefficient

Bajaj Holdings  Manaksia Coated

Poor diversification

The 3 months correlation between Bajaj and Manaksia is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Holdings Investment and Manaksia Coated Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Coated Metals 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 Manaksia Coated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Coated Metals has no effect on the direction of Bajaj Holdings i.e., Bajaj Holdings and Manaksia Coated go up and down completely randomly.

Pair Corralation between Bajaj Holdings and Manaksia Coated

Assuming the 90 days trading horizon Bajaj Holdings Investment is expected to under-perform the Manaksia Coated. But the stock apears to be less risky and, when comparing its historical volatility, Bajaj Holdings Investment is 1.98 times less risky than Manaksia Coated. The stock trades about -0.02 of its potential returns per unit of risk. The Manaksia Coated Metals is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  6,780  in Manaksia Coated Metals on September 23, 2024 and sell it today you would earn a total of  3,720  from holding Manaksia Coated Metals or generate 54.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Bajaj Holdings Investment  vs.  Manaksia Coated Metals

Bajaj Holdings Investment

Risk-Adjusted Performance

0 of 100

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Manaksia Coated Metals

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Manaksia Coated displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bajaj Holdings and Manaksia Coated

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

The idea behind Bajaj Holdings Investment and Manaksia Coated Metals 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.