Correlation Between Indo Borax and Man Infraconstructio

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

By analyzing existing cross correlation between Indo Borax Chemicals and Man Infraconstruction Limited, you can compare the effects of market volatilities on Indo Borax and Man Infraconstructio 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 Indo Borax with a short position of Man Infraconstructio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Borax and Man Infraconstructio.

Diversification Opportunities for Indo Borax and Man Infraconstructio

0.0

Correlation Coefficient

Indo Borax  Man Infraconstructio

Pay attention - limited upside

The 3 months correlation between Indo and Man is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indo Borax Chemicals and Man Infraconstruction Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Infraconstruction and Indo Borax 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 Indo Borax Chemicals are associated (or correlated) with Man Infraconstructio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Infraconstruction has no effect on the direction of Indo Borax i.e., Indo Borax and Man Infraconstructio go up and down completely randomly.

Pair Corralation between Indo Borax and Man Infraconstructio

Assuming the 90 days trading horizon Indo Borax is expected to generate 20.51 times less return on investment than Man Infraconstructio. In addition to that, Indo Borax is 1.15 times more volatile than Man Infraconstruction Limited. It trades about 0.01 of its total potential returns per unit of risk. Man Infraconstruction Limited is currently generating about 0.19 per unit of volatility. If you would invest  18,394  in Man Infraconstruction Limited on October 7, 2024 and sell it today you would earn a total of  6,587  from holding Man Infraconstruction Limited or generate 35.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Indo Borax Chemicals  vs.  Man Infraconstruction Limited

Indo Borax Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Borax Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Indo Borax is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Man Infraconstruction

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Man Infraconstruction Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Man Infraconstructio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indo Borax and Man Infraconstructio

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

The idea behind Indo Borax Chemicals and Man Infraconstruction 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.