Correlation Between Hi-Tech Pipes and Indo Amines

Can any of the company-specific risk be diversified away by investing in both Hi-Tech Pipes and Indo Amines 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 Hi-Tech Pipes and Indo Amines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hi Tech Pipes Limited and Indo Amines Limited, you can compare the effects of market volatilities on Hi-Tech Pipes and Indo Amines 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 Hi-Tech Pipes with a short position of Indo Amines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi-Tech Pipes and Indo Amines.

Diversification Opportunities for Hi-Tech Pipes and Indo Amines

0.95

Correlation Coefficient

Hi-Tech Pipes  Indo Amines

Almost no diversification

The 3 months correlation between Hi-Tech and Indo is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Pipes Limited and Indo Amines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Amines Limited and Hi-Tech Pipes 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 Hi Tech Pipes Limited are associated (or correlated) with Indo Amines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Amines Limited has no effect on the direction of Hi-Tech Pipes i.e., Hi-Tech Pipes and Indo Amines go up and down completely randomly.

Pair Corralation between Hi-Tech Pipes and Indo Amines

Assuming the 90 days trading horizon Hi Tech Pipes Limited is expected to under-perform the Indo Amines. But the stock apears to be less risky and, when comparing its historical volatility, Hi Tech Pipes Limited is 1.21 times less risky than Indo Amines. The stock trades about -0.23 of its potential returns per unit of risk. The Indo Amines Limited is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  17,412  in Indo Amines Limited on December 1, 2024 and sell it today you would lose (5,957) from holding Indo Amines Limited or give up 34.21% of portfolio value over 90 days.

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

Hi Tech Pipes Limited  vs.  Indo Amines Limited

Hi Tech Pipes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hi Tech Pipes Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Indo Amines Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indo Amines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Hi-Tech Pipes and Indo Amines

The main advantage of trading using opposite Hi-Tech Pipes and Indo Amines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi-Tech Pipes position performs unexpectedly, Indo Amines 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 Indo Amines will offset losses from the drop in Indo Amines' long position.

The idea behind Hi Tech Pipes Limited and Indo Amines Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.