Correlation Between Capacite Infraprojects and Maharashtra Seamless

Can any of the company-specific risk be diversified away by investing in both Capacite Infraprojects and Maharashtra Seamless 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 Seamless 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 Seamless Limited, you can compare the effects of market volatilities on Capacite Infraprojects and Maharashtra Seamless 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 Seamless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capacite Infraprojects and Maharashtra Seamless.

Diversification Opportunities for Capacite Infraprojects and Maharashtra Seamless

0.83

Correlation Coefficient

Capacite Infraprojects  Maharashtra Seamless

Very poor diversification

The 3 months correlation between Capacite and Maharashtra is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Capacite Infraprojects Limited and Maharashtra Seamless Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maharashtra Seamless 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 Seamless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maharashtra Seamless has no effect on the direction of Capacite Infraprojects i.e., Capacite Infraprojects and Maharashtra Seamless go up and down completely randomly.

Pair Corralation between Capacite Infraprojects and Maharashtra Seamless

Assuming the 90 days trading horizon Capacite Infraprojects Limited is expected to generate 1.2 times more return on investment than Maharashtra Seamless. However, Capacite Infraprojects is 1.2 times more volatile than Maharashtra Seamless Limited. It trades about 0.13 of its potential returns per unit of risk. Maharashtra Seamless Limited is currently generating about 0.04 per unit of risk. If you would invest  30,420  in Capacite Infraprojects Limited on September 30, 2024 and sell it today you would earn a total of  13,725  from holding Capacite Infraprojects Limited or generate 45.12% return on investment over 90 days.

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

Capacite Infraprojects Limited  vs.  Maharashtra Seamless Limited

Capacite Infraprojects

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capacite Infraprojects Limited are ranked lower than 6 (%) 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 Seamless

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maharashtra Seamless Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Maharashtra Seamless may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Capacite Infraprojects and Maharashtra Seamless

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

The idea behind Capacite Infraprojects Limited and Maharashtra Seamless 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.