Correlation Between Cartrade Tech and Hindustan Construction

Can any of the company-specific risk be diversified away by investing in both Cartrade Tech and Hindustan Construction 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 Cartrade Tech and Hindustan Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cartrade Tech and Hindustan Construction

0.14

Correlation Coefficient

Cartrade Tech  Hindustan Construction

Average diversification

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

Pair Corralation between Cartrade Tech and Hindustan Construction

Assuming the 90 days trading horizon Cartrade Tech Limited is expected to generate 0.78 times more return on investment than Hindustan Construction. However, Cartrade Tech Limited is 1.28 times less risky than Hindustan Construction. It trades about 0.11 of its potential returns per unit of risk. Hindustan Construction is currently generating about 0.06 per unit of risk. If you would invest  48,250  in Cartrade Tech Limited on October 22, 2024 and sell it today you would earn a total of  98,975  from holding Cartrade Tech Limited or generate 205.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.48%
Values	Daily Returns

Cartrade Tech Limited  vs.  Hindustan Construction

Cartrade Tech Limited

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cartrade Tech Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Cartrade Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hindustan Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hindustan Construction is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cartrade Tech and Hindustan Construction

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

The idea behind Cartrade Tech Limited and Hindustan Construction 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.

Check out your portfolio center.

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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.