Correlation Between Hisar Metal and Le Travenues

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

Diversification Opportunities for Hisar Metal and Le Travenues

0.85

Correlation Coefficient

Hisar Metal  Le Travenues

Very poor diversification

The 3 months correlation between Hisar and IXIGO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Le Travenues Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Le Travenues Technology 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 Le Travenues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Le Travenues Technology has no effect on the direction of Hisar Metal i.e., Hisar Metal and Le Travenues go up and down completely randomly.

Pair Corralation between Hisar Metal and Le Travenues

Assuming the 90 days trading horizon Hisar Metal is expected to generate 2.31 times less return on investment than Le Travenues. But when comparing it to its historical volatility, Hisar Metal Industries is 1.24 times less risky than Le Travenues. It trades about 0.09 of its potential returns per unit of risk. Le Travenues Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  14,413  in Le Travenues Technology on October 11, 2024 and sell it today you would earn a total of  1,740  from holding Le Travenues Technology or generate 12.07% return on investment over 90 days.

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

Hisar Metal Industries  vs.  Le Travenues Technology

Hisar Metal Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Hisar Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Le Travenues Technology

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Le Travenues Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, Le Travenues may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hisar Metal and Le Travenues

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

The idea behind Hisar Metal Industries and Le Travenues Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.