Correlation Between Hisar Metal and Indian Card

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

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

Diversification Opportunities for Hisar Metal and Indian Card

0.65

Correlation Coefficient

Hisar Metal  Indian Card

Poor diversification

The 3 months correlation between Hisar and Indian is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Indian Card Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Card Clothing and Hisar 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 Hisar Metal Industries are associated (or correlated) with Indian Card. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Card Clothing has no effect on the direction of Hisar Metal i.e., Hisar Metal and Indian Card go up and down completely randomly.

Pair Corralation between Hisar Metal and Indian Card

Assuming the 90 days trading horizon Hisar Metal Industries is expected to under-perform the Indian Card. In addition to that, Hisar Metal is 1.2 times more volatile than Indian Card Clothing. It trades about -0.01 of its total potential returns per unit of risk. Indian Card Clothing is currently generating about 0.02 per unit of volatility. If you would invest  25,015  in Indian Card Clothing on September 2, 2024 and sell it today you would earn a total of  1,555  from holding Indian Card Clothing or generate 6.22% return on investment over 90 days.

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

Hisar Metal Industries  vs.  Indian Card Clothing

Hisar Metal Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hisar Metal Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Indian Card Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Card Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Hisar Metal and Indian Card

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

The idea behind Hisar Metal Industries and Indian Card Clothing 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.