Correlation Between Hisar Metal and Southern Petrochemicals

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

Diversification Opportunities for Hisar Metal and Southern Petrochemicals

-0.35

Correlation Coefficient

Hisar Metal  Southern Petrochemicals

Very good diversification

The 3 months correlation between Hisar and Southern is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Southern Petrochemicals Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Petrochemicals 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 Southern Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Petrochemicals has no effect on the direction of Hisar Metal i.e., Hisar Metal and Southern Petrochemicals go up and down completely randomly.

Pair Corralation between Hisar Metal and Southern Petrochemicals

Assuming the 90 days trading horizon Hisar Metal Industries is expected to under-perform the Southern Petrochemicals. In addition to that, Hisar Metal is 1.05 times more volatile than Southern Petrochemicals Industries. It trades about -0.05 of its total potential returns per unit of risk. Southern Petrochemicals Industries is currently generating about 0.07 per unit of volatility. If you would invest  7,383  in Southern Petrochemicals Industries on December 27, 2024 and sell it today you would earn a total of  725.00  from holding Southern Petrochemicals Industries or generate 9.82% 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.  Southern Petrochemicals Indust

Hisar Metal Industries

Risk-Adjusted Performance

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.

Southern Petrochemicals

Risk-Adjusted Performance

Modest

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

Pair Trading with Hisar Metal and Southern Petrochemicals

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

The idea behind Hisar Metal Industries and Southern Petrochemicals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.