Correlation Between ILFS Investment and Hisar Metal

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Can any of the company-specific risk be diversified away by investing in both ILFS Investment and Hisar Metal 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 ILFS Investment and Hisar Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ILFS Investment Managers and Hisar Metal Industries, you can compare the effects of market volatilities on ILFS Investment and Hisar Metal 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 ILFS Investment with a short position of Hisar Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ILFS Investment and Hisar Metal.

Diversification Opportunities for ILFS Investment and Hisar Metal

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between ILFS and Hisar is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ILFS Investment Managers and Hisar Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisar Metal Industries and ILFS Investment 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 ILFS Investment Managers are associated (or correlated) with Hisar Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisar Metal Industries has no effect on the direction of ILFS Investment i.e., ILFS Investment and Hisar Metal go up and down completely randomly.

Pair Corralation between ILFS Investment and Hisar Metal

Assuming the 90 days trading horizon ILFS Investment is expected to generate 6.49 times less return on investment than Hisar Metal. But when comparing it to its historical volatility, ILFS Investment Managers is 1.06 times less risky than Hisar Metal. It trades about 0.01 of its potential returns per unit of risk. Hisar Metal Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18,254  in Hisar Metal Industries on October 24, 2024 and sell it today you would earn a total of  2,635  from holding Hisar Metal Industries or generate 14.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ILFS Investment Managers  vs.  Hisar Metal Industries

 Performance 
       Timeline  
ILFS Investment Managers 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ILFS Investment Managers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ILFS Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Hisar Metal Industries 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hisar Metal Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Hisar Metal exhibited solid returns over the last few months and may actually be approaching a breakup point.

ILFS Investment and Hisar Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ILFS Investment and Hisar Metal

The main advantage of trading using opposite ILFS Investment and Hisar Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ILFS Investment position performs unexpectedly, Hisar Metal 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 Hisar Metal will offset losses from the drop in Hisar Metal's long position.
The idea behind ILFS Investment Managers and Hisar Metal Industries 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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