Correlation Between Hisar Metal and Shree Pushkar

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

Diversification Opportunities for Hisar Metal and Shree Pushkar

-0.06

Correlation Coefficient

Hisar Metal  Shree Pushkar

Good diversification

The 3 months correlation between Hisar and Shree is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Shree Pushkar Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shree Pushkar Chemicals 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 Shree Pushkar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shree Pushkar Chemicals has no effect on the direction of Hisar Metal i.e., Hisar Metal and Shree Pushkar go up and down completely randomly.

Pair Corralation between Hisar Metal and Shree Pushkar

Assuming the 90 days trading horizon Hisar Metal is expected to generate 8.64 times less return on investment than Shree Pushkar. But when comparing it to its historical volatility, Hisar Metal Industries is 1.18 times less risky than Shree Pushkar. It trades about 0.03 of its potential returns per unit of risk. Shree Pushkar Chemicals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  25,125  in Shree Pushkar Chemicals on September 20, 2024 and sell it today you would earn a total of  10,050  from holding Shree Pushkar Chemicals or generate 40.0% return on investment over 90 days.

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

Hisar Metal Industries  vs.  Shree Pushkar Chemicals

Hisar Metal Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hisar Metal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Shree Pushkar Chemicals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shree Pushkar Chemicals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Shree Pushkar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hisar Metal and Shree Pushkar

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

The idea behind Hisar Metal Industries and Shree Pushkar Chemicals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.