Correlation Between Bajaj Holdings and ShippingOf India

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

Diversification Opportunities for Bajaj Holdings and ShippingOf India

-0.53

Correlation Coefficient

Bajaj Holdings  ShippingOf India

Excellent diversification

The 3 months correlation between Bajaj and ShippingOf is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Holdings Investment and Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShippingOf India 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 ShippingOf India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShippingOf India has no effect on the direction of Bajaj Holdings i.e., Bajaj Holdings and ShippingOf India go up and down completely randomly.

Pair Corralation between Bajaj Holdings and ShippingOf India

Assuming the 90 days trading horizon Bajaj Holdings Investment is expected to generate 1.21 times more return on investment than ShippingOf India. However, Bajaj Holdings is 1.21 times more volatile than Shipping. It trades about 0.07 of its potential returns per unit of risk. Shipping is currently generating about -0.27 per unit of risk. If you would invest  1,036,550  in Bajaj Holdings Investment on December 1, 2024 and sell it today you would earn a total of  120,885  from holding Bajaj Holdings Investment or generate 11.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Bajaj Holdings Investment  vs.  Shipping

Bajaj Holdings Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Holdings Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Bajaj Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

ShippingOf India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bajaj Holdings and ShippingOf India

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

The idea behind Bajaj Holdings Investment and Shipping 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.