Correlation Between Bajaj Holdings and Niraj Ispat

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

Diversification Opportunities for Bajaj Holdings and Niraj Ispat

-0.01

Correlation Coefficient

Bajaj Holdings  Niraj Ispat

Good diversification

The 3 months correlation between Bajaj and Niraj is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Holdings Investment and Niraj Ispat Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niraj Ispat Industries 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 Niraj Ispat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niraj Ispat Industries has no effect on the direction of Bajaj Holdings i.e., Bajaj Holdings and Niraj Ispat go up and down completely randomly.

Pair Corralation between Bajaj Holdings and Niraj Ispat

Assuming the 90 days trading horizon Bajaj Holdings is expected to generate 6.88 times less return on investment than Niraj Ispat. But when comparing it to its historical volatility, Bajaj Holdings Investment is 1.22 times less risky than Niraj Ispat. It trades about 0.04 of its potential returns per unit of risk. Niraj Ispat Industries is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  18,565  in Niraj Ispat Industries on September 21, 2024 and sell it today you would earn a total of  4,784  from holding Niraj Ispat Industries or generate 25.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Bajaj Holdings Investment  vs.  Niraj Ispat Industries

Bajaj Holdings Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Holdings Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Niraj Ispat Industries

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Niraj Ispat Industries are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Niraj Ispat unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bajaj Holdings and Niraj Ispat

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

The idea behind Bajaj Holdings Investment and Niraj Ispat Industries 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.