Correlation Between Gujarat Narmada and Hisar Metal

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

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

Diversification Opportunities for Gujarat Narmada and Hisar Metal

-0.31

Correlation Coefficient

Gujarat Narmada  Hisar Metal

Very good diversification

The 3 months correlation between Gujarat and Hisar is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gujarat Narmada Valley 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 Gujarat Narmada 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 Gujarat Narmada Valley 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 Gujarat Narmada i.e., Gujarat Narmada and Hisar Metal go up and down completely randomly.

Pair Corralation between Gujarat Narmada and Hisar Metal

Assuming the 90 days trading horizon Gujarat Narmada Valley is expected to under-perform the Hisar Metal. But the stock apears to be less risky and, when comparing its historical volatility, Gujarat Narmada Valley is 1.48 times less risky than Hisar Metal. The stock trades about -0.12 of its potential returns per unit of risk. The Hisar Metal Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  17,246  in Hisar Metal Industries on November 29, 2024 and sell it today you would earn a total of  496.00  from holding Hisar Metal Industries or generate 2.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Gujarat Narmada Valley  vs.  Hisar Metal Industries

Gujarat Narmada Valley

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gujarat Narmada Valley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hisar Metal Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hisar Metal is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gujarat Narmada and Hisar Metal

The main advantage of trading using opposite Gujarat Narmada and Hisar Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gujarat Narmada 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 Gujarat Narmada Valley 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.