Correlation Between Maharashtra Scooters and Infomedia Press

Can any of the company-specific risk be diversified away by investing in both Maharashtra Scooters and Infomedia Press 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 Maharashtra Scooters and Infomedia Press into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maharashtra Scooters Limited and Infomedia Press Limited, you can compare the effects of market volatilities on Maharashtra Scooters and Infomedia Press 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 Maharashtra Scooters with a short position of Infomedia Press. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maharashtra Scooters and Infomedia Press.

Diversification Opportunities for Maharashtra Scooters and Infomedia Press

0.65

Correlation Coefficient

Maharashtra Scooters  Infomedia Press

Poor diversification

The 3 months correlation between Maharashtra and Infomedia is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Maharashtra Scooters Limited and Infomedia Press Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia Press and Maharashtra Scooters 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 Maharashtra Scooters Limited are associated (or correlated) with Infomedia Press. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia Press has no effect on the direction of Maharashtra Scooters i.e., Maharashtra Scooters and Infomedia Press go up and down completely randomly.

Pair Corralation between Maharashtra Scooters and Infomedia Press

Assuming the 90 days trading horizon Maharashtra Scooters Limited is expected to under-perform the Infomedia Press. But the stock apears to be less risky and, when comparing its historical volatility, Maharashtra Scooters Limited is 1.13 times less risky than Infomedia Press. The stock trades about 0.0 of its potential returns per unit of risk. The Infomedia Press Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  668.00  in Infomedia Press Limited on September 5, 2024 and sell it today you would earn a total of  26.00  from holding Infomedia Press Limited or generate 3.89% return on investment over 90 days.

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

Maharashtra Scooters Limited  vs.  Infomedia Press Limited

Maharashtra Scooters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maharashtra Scooters Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Maharashtra Scooters is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Infomedia Press

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infomedia Press Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Infomedia Press may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Maharashtra Scooters and Infomedia Press

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

The idea behind Maharashtra Scooters Limited and Infomedia Press 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.