Correlation Between Dynamic Cables and Hisar Metal

Can any of the company-specific risk be diversified away by investing in both Dynamic Cables and Hisar Metal 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 Dynamic Cables and Hisar Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dynamic Cables Limited and Hisar Metal Industries, you can compare the effects of market volatilities on Dynamic Cables and Hisar Metal 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 Dynamic Cables with a short position of Hisar Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Cables and Hisar Metal.

Diversification Opportunities for Dynamic Cables and Hisar Metal

-0.09

Correlation Coefficient

Dynamic Cables  Hisar Metal

Good diversification

The 3 months correlation between Dynamic and Hisar is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Cables Limited and Hisar Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisar Metal Industries and Dynamic Cables 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 Dynamic Cables Limited are associated (or correlated) with Hisar Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisar Metal Industries has no effect on the direction of Dynamic Cables i.e., Dynamic Cables and Hisar Metal go up and down completely randomly.

Pair Corralation between Dynamic Cables and Hisar Metal

Assuming the 90 days trading horizon Dynamic Cables Limited is expected to generate 1.09 times more return on investment than Hisar Metal. However, Dynamic Cables is 1.09 times more volatile than Hisar Metal Industries. It trades about 0.11 of its potential returns per unit of risk. Hisar Metal Industries is currently generating about 0.04 per unit of risk. If you would invest  20,082  in Dynamic Cables Limited on September 29, 2024 and sell it today you would earn a total of  77,298  from holding Dynamic Cables Limited or generate 384.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.36%
Values	Daily Returns

Dynamic Cables Limited  vs.  Hisar Metal Industries

Dynamic Cables

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Cables Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Dynamic Cables unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hisar Metal Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Hisar Metal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dynamic Cables and Hisar Metal

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

The idea behind Dynamic Cables Limited and Hisar Metal Industries 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.