Correlation Between Capacite Infraprojects and Maharashtra Scooters

Can any of the company-specific risk be diversified away by investing in both Capacite Infraprojects and Maharashtra Scooters 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 Capacite Infraprojects and Maharashtra Scooters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capacite Infraprojects Limited and Maharashtra Scooters Limited, you can compare the effects of market volatilities on Capacite Infraprojects and Maharashtra Scooters 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 Capacite Infraprojects with a short position of Maharashtra Scooters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capacite Infraprojects and Maharashtra Scooters.

Diversification Opportunities for Capacite Infraprojects and Maharashtra Scooters

-0.45

Correlation Coefficient

Capacite Infraprojects  Maharashtra Scooters

Very good diversification

The 3 months correlation between Capacite and Maharashtra is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Capacite Infraprojects Limited and Maharashtra Scooters Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maharashtra Scooters and Capacite Infraprojects 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 Capacite Infraprojects Limited are associated (or correlated) with Maharashtra Scooters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maharashtra Scooters has no effect on the direction of Capacite Infraprojects i.e., Capacite Infraprojects and Maharashtra Scooters go up and down completely randomly.

Pair Corralation between Capacite Infraprojects and Maharashtra Scooters

Assuming the 90 days trading horizon Capacite Infraprojects Limited is expected to generate 3.75 times more return on investment than Maharashtra Scooters. However, Capacite Infraprojects is 3.75 times more volatile than Maharashtra Scooters Limited. It trades about 0.35 of its potential returns per unit of risk. Maharashtra Scooters Limited is currently generating about 0.14 per unit of risk. If you would invest  36,070  in Capacite Infraprojects Limited on September 23, 2024 and sell it today you would earn a total of  7,740  from holding Capacite Infraprojects Limited or generate 21.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Capacite Infraprojects Limited  vs.  Maharashtra Scooters Limited

Capacite Infraprojects

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capacite Infraprojects Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, Capacite Infraprojects unveiled solid returns over the last few months and may actually be approaching a breakup point.

Maharashtra Scooters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maharashtra Scooters Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Capacite Infraprojects and Maharashtra Scooters

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

The idea behind Capacite Infraprojects Limited and Maharashtra Scooters Limited 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 Global Correlations module to find global opportunities by holding instruments from different markets.