Correlation Between Hisar Metal and Baazar Style

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

Diversification Opportunities for Hisar Metal and Baazar Style

0.78

Correlation Coefficient

Hisar Metal  Baazar Style

Poor diversification

The 3 months correlation between Hisar and Baazar is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hisar Metal Industries and Baazar Style Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baazar Style Retail 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 Baazar Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baazar Style Retail has no effect on the direction of Hisar Metal i.e., Hisar Metal and Baazar Style go up and down completely randomly.

Pair Corralation between Hisar Metal and Baazar Style

Assuming the 90 days trading horizon Hisar Metal Industries is expected to under-perform the Baazar Style. But the stock apears to be less risky and, when comparing its historical volatility, Hisar Metal Industries is 1.46 times less risky than Baazar Style. The stock trades about -0.09 of its potential returns per unit of risk. The Baazar Style Retail is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  40,000  in Baazar Style Retail on August 31, 2024 and sell it today you would lose (5,410) from holding Baazar Style Retail or give up 13.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.16%
Values	Daily Returns

Hisar Metal Industries  vs.  Baazar Style Retail

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Baazar Style Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baazar Style Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hisar Metal and Baazar Style

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

The idea behind Hisar Metal Industries and Baazar Style Retail 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.