Correlation Between Capacite Infraprojects and Ratnamani Metals

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

Diversification Opportunities for Capacite Infraprojects and Ratnamani Metals

0.93

Correlation Coefficient

Capacite Infraprojects  Ratnamani Metals

Almost no diversification

The 3 months correlation between Capacite and Ratnamani is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Capacite Infraprojects Limited and Ratnamani Metals Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratnamani Metals Tubes 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 Ratnamani Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratnamani Metals Tubes has no effect on the direction of Capacite Infraprojects i.e., Capacite Infraprojects and Ratnamani Metals go up and down completely randomly.

Pair Corralation between Capacite Infraprojects and Ratnamani Metals

Assuming the 90 days trading horizon Capacite Infraprojects Limited is expected to generate 1.46 times more return on investment than Ratnamani Metals. However, Capacite Infraprojects is 1.46 times more volatile than Ratnamani Metals Tubes. It trades about -0.1 of its potential returns per unit of risk. Ratnamani Metals Tubes is currently generating about -0.16 per unit of risk. If you would invest  43,205  in Capacite Infraprojects Limited on December 29, 2024 and sell it today you would lose (8,155) from holding Capacite Infraprojects Limited or give up 18.88% of portfolio value over 90 days.

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

Capacite Infraprojects Limited  vs.  Ratnamani Metals Tubes

Capacite Infraprojects

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capacite Infraprojects 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 forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ratnamani Metals Tubes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ratnamani Metals Tubes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Capacite Infraprojects and Ratnamani Metals

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

The idea behind Capacite Infraprojects Limited and Ratnamani Metals Tubes 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.