Correlation Between Hindustan Copper and Hisar Metal

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

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

Diversification Opportunities for Hindustan Copper and Hisar Metal

-0.03

Correlation Coefficient

Hindustan Copper  Hisar Metal

Good diversification

The 3 months correlation between Hindustan and Hisar is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Copper Limited 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 Hindustan Copper 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 Hindustan Copper Limited 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 Hindustan Copper i.e., Hindustan Copper and Hisar Metal go up and down completely randomly.

Pair Corralation between Hindustan Copper and Hisar Metal

Assuming the 90 days trading horizon Hindustan Copper Limited is expected to under-perform the Hisar Metal. But the stock apears to be less risky and, when comparing its historical volatility, Hindustan Copper Limited is 1.37 times less risky than Hisar Metal. The stock trades about -0.19 of its potential returns per unit of risk. The Hisar Metal Industries is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  18,333  in Hisar Metal Industries on October 9, 2024 and sell it today you would earn a total of  3,018  from holding Hisar Metal Industries or generate 16.46% return on investment over 90 days.

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

Hindustan Copper Limited  vs.  Hisar Metal Industries

Hindustan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hisar Metal Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Hisar Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hindustan Copper and Hisar Metal

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

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.