Correlation Between Alps/kotak India and Oil Gas

Can any of the company-specific risk be diversified away by investing in both Alps/kotak India and Oil Gas 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 Alps/kotak India and Oil Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpskotak India Growth and Oil Gas Ultrasector, you can compare the effects of market volatilities on Alps/kotak India and Oil Gas 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 Alps/kotak India with a short position of Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alps/kotak India and Oil Gas.

Diversification Opportunities for Alps/kotak India and Oil Gas

0.37

Correlation Coefficient

Alps/kotak India  Oil Gas

Weak diversification

The 3 months correlation between Alps/kotak and Oil is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alpskotak India Growth and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector and Alps/kotak India 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 Alpskotak India Growth are associated (or correlated) with Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Alps/kotak India i.e., Alps/kotak India and Oil Gas go up and down completely randomly.

Pair Corralation between Alps/kotak India and Oil Gas

Assuming the 90 days horizon Alps/kotak India is expected to generate 4.89 times less return on investment than Oil Gas. But when comparing it to its historical volatility, Alpskotak India Growth is 1.83 times less risky than Oil Gas. It trades about 0.01 of its potential returns per unit of risk. Oil Gas Ultrasector is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,944  in Oil Gas Ultrasector on December 4, 2024 and sell it today you would earn a total of  677.00  from holding Oil Gas Ultrasector or generate 23.0% return on investment over 90 days.

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

Alpskotak India Growth  vs.  Oil Gas Ultrasector

Alpskotak India Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpskotak India Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly 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 fund investors.

Oil Gas Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oil Gas Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oil Gas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alps/kotak India and Oil Gas

The main advantage of trading using opposite Alps/kotak India and Oil Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alps/kotak India position performs unexpectedly, Oil Gas 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 Oil Gas will offset losses from the drop in Oil Gas' long position.

The idea behind Alpskotak India Growth and Oil Gas Ultrasector 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..