Correlation Between Blue Coast and Hisar Metal

Can any of the company-specific risk be diversified away by investing in both Blue Coast and Hisar Metal 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 Blue Coast and Hisar Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Coast Hotels and Hisar Metal Industries, you can compare the effects of market volatilities on Blue Coast and Hisar Metal 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 Blue Coast with a short position of Hisar Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Coast and Hisar Metal.

Diversification Opportunities for Blue Coast and Hisar Metal

0.14

Correlation Coefficient

Blue Coast  Hisar Metal

Average diversification

The 3 months correlation between Blue and Hisar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Blue Coast Hotels and Hisar Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisar Metal Industries and Blue Coast 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 Blue Coast Hotels are associated (or correlated) with Hisar Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisar Metal Industries has no effect on the direction of Blue Coast i.e., Blue Coast and Hisar Metal go up and down completely randomly.

Pair Corralation between Blue Coast and Hisar Metal

Assuming the 90 days trading horizon Blue Coast Hotels is expected to generate 1.01 times more return on investment than Hisar Metal. However, Blue Coast is 1.01 times more volatile than Hisar Metal Industries. It trades about 0.8 of its potential returns per unit of risk. Hisar Metal Industries is currently generating about 0.03 per unit of risk. If you would invest  998.00  in Blue Coast Hotels on November 29, 2024 and sell it today you would earn a total of  3,229  from holding Blue Coast Hotels or generate 323.55% return on investment over 90 days.

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

Blue Coast Hotels  vs.  Hisar Metal Industries

Blue Coast Hotels

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Coast Hotels are ranked lower than 63 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Blue Coast sustained solid returns over the last few months and may actually be approaching a breakup point.

Hisar Metal Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hisar Metal is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blue Coast and Hisar Metal

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

The idea behind Blue Coast Hotels and Hisar Metal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.