Correlation Between Generic Engineering and Cholamandalam Investment

Can any of the company-specific risk be diversified away by investing in both Generic Engineering and Cholamandalam Investment 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 Generic Engineering and Cholamandalam Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Generic Engineering Construction and Cholamandalam Investment and, you can compare the effects of market volatilities on Generic Engineering and Cholamandalam Investment 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 Generic Engineering with a short position of Cholamandalam Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Engineering and Cholamandalam Investment.

Diversification Opportunities for Generic Engineering and Cholamandalam Investment

-0.61

Correlation Coefficient

Generic Engineering  Cholamandalam Investment

Excellent diversification

The 3 months correlation between Generic and Cholamandalam is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Generic Engineering Constructi and Cholamandalam Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cholamandalam Investment and Generic Engineering 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 Generic Engineering Construction are associated (or correlated) with Cholamandalam Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cholamandalam Investment has no effect on the direction of Generic Engineering i.e., Generic Engineering and Cholamandalam Investment go up and down completely randomly.

Pair Corralation between Generic Engineering and Cholamandalam Investment

Assuming the 90 days trading horizon Generic Engineering Construction is expected to under-perform the Cholamandalam Investment. In addition to that, Generic Engineering is 1.56 times more volatile than Cholamandalam Investment and. It trades about -0.15 of its total potential returns per unit of risk. Cholamandalam Investment and is currently generating about 0.09 per unit of volatility. If you would invest  124,947  in Cholamandalam Investment and on December 1, 2024 and sell it today you would earn a total of  15,128  from holding Cholamandalam Investment and or generate 12.11% return on investment over 90 days.

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

Generic Engineering Constructi  vs.  Cholamandalam Investment and

Generic Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Generic Engineering Construction 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 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.

Cholamandalam Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cholamandalam Investment and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Cholamandalam Investment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generic Engineering and Cholamandalam Investment

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

The idea behind Generic Engineering Construction and Cholamandalam Investment and 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.

Check out your portfolio center.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.