Correlation Between Hilton Metal and Vidhi Specialty

Can any of the company-specific risk be diversified away by investing in both Hilton Metal and Vidhi Specialty 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 Vidhi Specialty 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 Vidhi Specialty Food, you can compare the effects of market volatilities on Hilton Metal and Vidhi Specialty 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 Vidhi Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Metal and Vidhi Specialty.

Diversification Opportunities for Hilton Metal and Vidhi Specialty

0.76

Correlation Coefficient

Hilton Metal  Vidhi Specialty

Poor diversification

The 3 months correlation between Hilton and Vidhi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Vidhi Specialty Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vidhi Specialty Food 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 Vidhi Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vidhi Specialty Food has no effect on the direction of Hilton Metal i.e., Hilton Metal and Vidhi Specialty go up and down completely randomly.

Pair Corralation between Hilton Metal and Vidhi Specialty

Assuming the 90 days trading horizon Hilton Metal Forging is expected to under-perform the Vidhi Specialty. In addition to that, Hilton Metal is 1.34 times more volatile than Vidhi Specialty Food. It trades about -0.1 of its total potential returns per unit of risk. Vidhi Specialty Food is currently generating about -0.09 per unit of volatility. If you would invest  53,305  in Vidhi Specialty Food on December 26, 2024 and sell it today you would lose (10,255) from holding Vidhi Specialty Food or give up 19.24% of portfolio value over 90 days.

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

Hilton Metal Forging  vs.  Vidhi Specialty Food

Hilton Metal Forging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Metal Forging 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 basic 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.

Vidhi Specialty Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vidhi Specialty Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hilton Metal and Vidhi Specialty

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

The idea behind Hilton Metal Forging and Vidhi Specialty Food 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.