Correlation Between HDFC Asset and Manaksia Coated

Can any of the company-specific risk be diversified away by investing in both HDFC Asset and Manaksia Coated 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 HDFC Asset and Manaksia Coated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HDFC Asset Management and Manaksia Coated Metals, you can compare the effects of market volatilities on HDFC Asset and Manaksia Coated 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 HDFC Asset with a short position of Manaksia Coated. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Asset and Manaksia Coated.

Diversification Opportunities for HDFC Asset and Manaksia Coated

-0.39

Correlation Coefficient

HDFC Asset  Manaksia Coated

Very good diversification

The 3 months correlation between HDFC and Manaksia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Asset Management and Manaksia Coated Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manaksia Coated Metals and HDFC Asset 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 HDFC Asset Management are associated (or correlated) with Manaksia Coated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manaksia Coated Metals has no effect on the direction of HDFC Asset i.e., HDFC Asset and Manaksia Coated go up and down completely randomly.

Pair Corralation between HDFC Asset and Manaksia Coated

Assuming the 90 days trading horizon HDFC Asset is expected to generate 2.52 times less return on investment than Manaksia Coated. But when comparing it to its historical volatility, HDFC Asset Management is 1.76 times less risky than Manaksia Coated. It trades about 0.08 of its potential returns per unit of risk. Manaksia Coated Metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,010  in Manaksia Coated Metals on October 13, 2024 and sell it today you would earn a total of  9,035  from holding Manaksia Coated Metals or generate 449.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

HDFC Asset Management  vs.  Manaksia Coated Metals

HDFC Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HDFC Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Manaksia Coated Metals

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Manaksia Coated displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HDFC Asset and Manaksia Coated

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

The idea behind HDFC Asset Management and Manaksia Coated Metals 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.