Correlation Between Country Club and Manaksia Steels

Can any of the company-specific risk be diversified away by investing in both Country Club and Manaksia Steels 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 Country Club and Manaksia Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Country Club Hospitality and Manaksia Steels Limited, you can compare the effects of market volatilities on Country Club and Manaksia Steels 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 Country Club with a short position of Manaksia Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Club and Manaksia Steels.

Diversification Opportunities for Country Club and Manaksia Steels

0.11

Correlation Coefficient

Country Club  Manaksia Steels

Average diversification

The 3 months correlation between Country and Manaksia is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Country Club Hospitality and Manaksia Steels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Steels and Country Club 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 Country Club Hospitality are associated (or correlated) with Manaksia Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Steels has no effect on the direction of Country Club i.e., Country Club and Manaksia Steels go up and down completely randomly.

Pair Corralation between Country Club and Manaksia Steels

Assuming the 90 days trading horizon Country Club Hospitality is expected to generate 1.27 times more return on investment than Manaksia Steels. However, Country Club is 1.27 times more volatile than Manaksia Steels Limited. It trades about -0.02 of its potential returns per unit of risk. Manaksia Steels Limited is currently generating about -0.04 per unit of risk. If you would invest  2,194  in Country Club Hospitality on September 20, 2024 and sell it today you would lose (152.00) from holding Country Club Hospitality or give up 6.93% of portfolio value over 90 days.

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

Country Club Hospitality  vs.  Manaksia Steels Limited

Country Club Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Club Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Country Club is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Manaksia Steels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manaksia Steels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Manaksia Steels is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Country Club and Manaksia Steels

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

The idea behind Country Club Hospitality and Manaksia Steels 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.