Correlation Between Consolidated Construction and Motilal Oswal

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

By analyzing existing cross correlation between Consolidated Construction Consortium and Motilal Oswal Financial, you can compare the effects of market volatilities on Consolidated Construction and Motilal Oswal 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 Consolidated Construction with a short position of Motilal Oswal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and Motilal Oswal.

Diversification Opportunities for Consolidated Construction and Motilal Oswal

-0.34

Correlation Coefficient

Consolidated Construction  Motilal Oswal

Very good diversification

The 3 months correlation between Consolidated and Motilal is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and Motilal Oswal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motilal Oswal Financial and Consolidated Construction 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 Consolidated Construction Consortium are associated (or correlated) with Motilal Oswal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motilal Oswal Financial has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and Motilal Oswal go up and down completely randomly.

Pair Corralation between Consolidated Construction and Motilal Oswal

Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 19.21 times more return on investment than Motilal Oswal. However, Consolidated Construction is 19.21 times more volatile than Motilal Oswal Financial. It trades about 0.1 of its potential returns per unit of risk. Motilal Oswal Financial is currently generating about 0.11 per unit of risk. If you would invest  150.00  in Consolidated Construction Consortium on September 7, 2024 and sell it today you would earn a total of  1,602  from holding Consolidated Construction Consortium or generate 1068.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Consolidated Construction Cons  vs.  Motilal Oswal Financial

Consolidated Construction

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Construction Consortium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Consolidated Construction unveiled solid returns over the last few months and may actually be approaching a breakup point.

Motilal Oswal Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consolidated Construction and Motilal Oswal

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

The idea behind Consolidated Construction Consortium and Motilal Oswal Financial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.