Correlation Between Maharashtra Seamless and Can Fin

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

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

Diversification Opportunities for Maharashtra Seamless and Can Fin

-0.61

Correlation Coefficient

Maharashtra Seamless  Can Fin

Excellent diversification

The 3 months correlation between Maharashtra and Can is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Maharashtra Seamless Limited and Can Fin Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Can Fin Homes and Maharashtra Seamless 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 Seamless Limited are associated (or correlated) with Can Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Can Fin Homes has no effect on the direction of Maharashtra Seamless i.e., Maharashtra Seamless and Can Fin go up and down completely randomly.

Pair Corralation between Maharashtra Seamless and Can Fin

Assuming the 90 days trading horizon Maharashtra Seamless Limited is expected to generate 1.48 times more return on investment than Can Fin. However, Maharashtra Seamless is 1.48 times more volatile than Can Fin Homes. It trades about -0.09 of its potential returns per unit of risk. Can Fin Homes is currently generating about -0.32 per unit of risk. If you would invest  75,625  in Maharashtra Seamless Limited on October 10, 2024 and sell it today you would lose (4,375) from holding Maharashtra Seamless Limited or give up 5.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Maharashtra Seamless Limited  vs.  Can Fin Homes

Maharashtra Seamless

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maharashtra Seamless Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Maharashtra Seamless displayed solid returns over the last few months and may actually be approaching a breakup point.

Can Fin Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Can Fin Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Maharashtra Seamless and Can Fin

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

The idea behind Maharashtra Seamless Limited and Can Fin Homes 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.