Correlation Between Bajaj Finance and Omkar Speciality

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

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

Diversification Opportunities for Bajaj Finance and Omkar Speciality

-0.34

Correlation Coefficient

Bajaj Finance  Omkar Speciality

Very good diversification

The 3 months correlation between Bajaj and Omkar is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Finance Limited and Omkar Speciality Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omkar Speciality Che and Bajaj Finance 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 Finance Limited are associated (or correlated) with Omkar Speciality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omkar Speciality Che has no effect on the direction of Bajaj Finance i.e., Bajaj Finance and Omkar Speciality go up and down completely randomly.

Pair Corralation between Bajaj Finance and Omkar Speciality

Assuming the 90 days trading horizon Bajaj Finance Limited is expected to under-perform the Omkar Speciality. But the stock apears to be less risky and, when comparing its historical volatility, Bajaj Finance Limited is 2.06 times less risky than Omkar Speciality. The stock trades about -0.1 of its potential returns per unit of risk. The Omkar Speciality Chemicals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  929.00  in Omkar Speciality Chemicals on September 3, 2024 and sell it today you would lose (15.00) from holding Omkar Speciality Chemicals or give up 1.61% of portfolio value over 90 days.

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

Bajaj Finance Limited  vs.  Omkar Speciality Chemicals

Bajaj Finance Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bajaj Finance Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Omkar Speciality Che

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omkar Speciality Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Omkar Speciality is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bajaj Finance and Omkar Speciality

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

The idea behind Bajaj Finance Limited and Omkar Speciality Chemicals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.