Correlation Between Indian Metals and ROUTE MOBILE

Can any of the company-specific risk be diversified away by investing in both Indian Metals and ROUTE MOBILE 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 Indian Metals and ROUTE MOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indian Metals Ferro and ROUTE MOBILE LIMITED, you can compare the effects of market volatilities on Indian Metals and ROUTE MOBILE 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 Indian Metals with a short position of ROUTE MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Metals and ROUTE MOBILE.

Diversification Opportunities for Indian Metals and ROUTE MOBILE

-0.71

Correlation Coefficient

Indian Metals  ROUTE MOBILE

Pay attention - limited upside

The 3 months correlation between Indian and ROUTE is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Indian Metals Ferro and ROUTE MOBILE LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROUTE MOBILE LIMITED and Indian Metals 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 Indian Metals Ferro are associated (or correlated) with ROUTE MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROUTE MOBILE LIMITED has no effect on the direction of Indian Metals i.e., Indian Metals and ROUTE MOBILE go up and down completely randomly.

Pair Corralation between Indian Metals and ROUTE MOBILE

Assuming the 90 days trading horizon Indian Metals Ferro is expected to generate 1.7 times more return on investment than ROUTE MOBILE. However, Indian Metals is 1.7 times more volatile than ROUTE MOBILE LIMITED. It trades about 0.15 of its potential returns per unit of risk. ROUTE MOBILE LIMITED is currently generating about -0.09 per unit of risk. If you would invest  64,194  in Indian Metals Ferro on October 3, 2024 and sell it today you would earn a total of  21,356  from holding Indian Metals Ferro or generate 33.27% return on investment over 90 days.

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

Indian Metals Ferro  vs.  ROUTE MOBILE LIMITED

Indian Metals Ferro

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Metals Ferro are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indian Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

ROUTE MOBILE LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROUTE MOBILE LIMITED 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Indian Metals and ROUTE MOBILE

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

The idea behind Indian Metals Ferro and ROUTE MOBILE 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.