Correlation Between Engineers India and Hexa Tradex

Can any of the company-specific risk be diversified away by investing in both Engineers India and Hexa Tradex 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 Engineers India and Hexa Tradex into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Engineers India and Hexa Tradex

0.58

Correlation Coefficient

Engineers India  Hexa Tradex

Very weak diversification

The 3 months correlation between Engineers and Hexa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Engineers India Limited and Hexa Tradex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexa Tradex Limited and Engineers India 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 Engineers India Limited are associated (or correlated) with Hexa Tradex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexa Tradex Limited has no effect on the direction of Engineers India i.e., Engineers India and Hexa Tradex go up and down completely randomly.

Pair Corralation between Engineers India and Hexa Tradex

Assuming the 90 days trading horizon Engineers India Limited is expected to generate 0.85 times more return on investment than Hexa Tradex. However, Engineers India Limited is 1.17 times less risky than Hexa Tradex. It trades about -0.07 of its potential returns per unit of risk. Hexa Tradex Limited is currently generating about -0.15 per unit of risk. If you would invest  18,618  in Engineers India Limited on December 27, 2024 and sell it today you would lose (2,983) from holding Engineers India Limited or give up 16.02% of portfolio value over 90 days.

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

Engineers India Limited  vs.  Hexa Tradex Limited

Engineers India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Engineers India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hexa Tradex Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hexa Tradex Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Engineers India and Hexa Tradex

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

The idea behind Engineers India Limited and Hexa Tradex 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.