Correlation Between Maithan Alloys and Hindustan Copper

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

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

Diversification Opportunities for Maithan Alloys and Hindustan Copper

-0.21

Correlation Coefficient

Maithan Alloys  Hindustan Copper

Very good diversification

The 3 months correlation between Maithan and Hindustan is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Maithan Alloys Limited and Hindustan Copper Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Copper and Maithan Alloys 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 Maithan Alloys Limited are associated (or correlated) with Hindustan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Copper has no effect on the direction of Maithan Alloys i.e., Maithan Alloys and Hindustan Copper go up and down completely randomly.

Pair Corralation between Maithan Alloys and Hindustan Copper

Assuming the 90 days trading horizon Maithan Alloys Limited is expected to generate 0.88 times more return on investment than Hindustan Copper. However, Maithan Alloys Limited is 1.14 times less risky than Hindustan Copper. It trades about 0.03 of its potential returns per unit of risk. Hindustan Copper Limited is currently generating about -0.17 per unit of risk. If you would invest  108,455  in Maithan Alloys Limited on October 11, 2024 and sell it today you would earn a total of  2,885  from holding Maithan Alloys Limited or generate 2.66% return on investment over 90 days.

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

Maithan Alloys Limited  vs.  Hindustan Copper Limited

Maithan Alloys

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maithan Alloys Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Maithan Alloys is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Hindustan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Maithan Alloys and Hindustan Copper

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

The idea behind Maithan Alloys Limited and Hindustan Copper 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.