Correlation Between Hindustan Media and Styrenix Performance

Can any of the company-specific risk be diversified away by investing in both Hindustan Media and Styrenix Performance 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 Hindustan Media and Styrenix Performance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hindustan Media Ventures and Styrenix Performance Materials, you can compare the effects of market volatilities on Hindustan Media and Styrenix Performance 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 Hindustan Media with a short position of Styrenix Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hindustan Media and Styrenix Performance.

Diversification Opportunities for Hindustan Media and Styrenix Performance

0.7

Correlation Coefficient

Hindustan Media  Styrenix Performance

Poor diversification

The 3 months correlation between Hindustan and Styrenix is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Media Ventures and Styrenix Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Styrenix Performance and Hindustan Media 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 Hindustan Media Ventures are associated (or correlated) with Styrenix Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Styrenix Performance has no effect on the direction of Hindustan Media i.e., Hindustan Media and Styrenix Performance go up and down completely randomly.

Pair Corralation between Hindustan Media and Styrenix Performance

Assuming the 90 days trading horizon Hindustan Media Ventures is expected to generate 1.63 times more return on investment than Styrenix Performance. However, Hindustan Media is 1.63 times more volatile than Styrenix Performance Materials. It trades about -0.02 of its potential returns per unit of risk. Styrenix Performance Materials is currently generating about -0.04 per unit of risk. If you would invest  9,286  in Hindustan Media Ventures on December 28, 2024 and sell it today you would lose (831.00) from holding Hindustan Media Ventures or give up 8.95% of portfolio value over 90 days.

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

Hindustan Media Ventures  vs.  Styrenix Performance Materials

Hindustan Media Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hindustan Media Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hindustan Media is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Styrenix Performance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Styrenix Performance Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Hindustan Media and Styrenix Performance

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

The idea behind Hindustan Media Ventures and Styrenix Performance Materials 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.