Correlation Between Hilton Metal and Agarwal Industrial

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

By analyzing existing cross correlation between Hilton Metal Forging and Agarwal Industrial, you can compare the effects of market volatilities on Hilton Metal and Agarwal Industrial 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 Hilton Metal with a short position of Agarwal Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Metal and Agarwal Industrial.

Diversification Opportunities for Hilton Metal and Agarwal Industrial

0.84

Correlation Coefficient

Hilton Metal  Agarwal Industrial

Very poor diversification

The 3 months correlation between Hilton and Agarwal is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of Hilton Metal i.e., Hilton Metal and Agarwal Industrial go up and down completely randomly.

Pair Corralation between Hilton Metal and Agarwal Industrial

Assuming the 90 days trading horizon Hilton Metal is expected to generate 1.16 times less return on investment than Agarwal Industrial. In addition to that, Hilton Metal is 1.11 times more volatile than Agarwal Industrial. It trades about 0.05 of its total potential returns per unit of risk. Agarwal Industrial is currently generating about 0.07 per unit of volatility. If you would invest  56,694  in Agarwal Industrial on October 9, 2024 and sell it today you would earn a total of  66,916  from holding Agarwal Industrial or generate 118.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Hilton Metal Forging  vs.  Agarwal Industrial

Hilton Metal Forging

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Agarwal Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agarwal Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Agarwal Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hilton Metal and Agarwal Industrial

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

The idea behind Hilton Metal Forging and Agarwal Industrial 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.