Correlation Between Electrosteel Castings and Vaxtex Cotfab

Can any of the company-specific risk be diversified away by investing in both Electrosteel Castings and Vaxtex Cotfab 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 Electrosteel Castings and Vaxtex Cotfab into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Electrosteel Castings and Vaxtex Cotfab

-0.14

Correlation Coefficient

Electrosteel Castings  Vaxtex Cotfab

Good diversification

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

Pair Corralation between Electrosteel Castings and Vaxtex Cotfab

Assuming the 90 days trading horizon Electrosteel Castings Limited is expected to under-perform the Vaxtex Cotfab. In addition to that, Electrosteel Castings is 1.12 times more volatile than Vaxtex Cotfab Limited. It trades about -0.13 of its total potential returns per unit of risk. Vaxtex Cotfab Limited is currently generating about 0.1 per unit of volatility. If you would invest  80.00  in Vaxtex Cotfab Limited on October 7, 2024 and sell it today you would earn a total of  14.00  from holding Vaxtex Cotfab Limited or generate 17.5% return on investment over 90 days.

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

Electrosteel Castings Limited  vs.  Vaxtex Cotfab Limited

Electrosteel Castings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrosteel Castings Limited 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Vaxtex Cotfab Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vaxtex Cotfab Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Vaxtex Cotfab exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electrosteel Castings and Vaxtex Cotfab

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

The idea behind Electrosteel Castings Limited and Vaxtex Cotfab 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.