Correlation Between Maithan Alloys and UTI Asset

Can any of the company-specific risk be diversified away by investing in both Maithan Alloys and UTI Asset 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 UTI Asset 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 UTI Asset Management, you can compare the effects of market volatilities on Maithan Alloys and UTI Asset 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 UTI Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maithan Alloys and UTI Asset.

Diversification Opportunities for Maithan Alloys and UTI Asset

0.08

Correlation Coefficient

Maithan Alloys  UTI Asset

Significant diversification

The 3 months correlation between Maithan and UTI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Maithan Alloys Limited and UTI Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTI Asset Management 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 UTI Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTI Asset Management has no effect on the direction of Maithan Alloys i.e., Maithan Alloys and UTI Asset go up and down completely randomly.

Pair Corralation between Maithan Alloys and UTI Asset

Assuming the 90 days trading horizon Maithan Alloys Limited is expected to under-perform the UTI Asset. But the stock apears to be less risky and, when comparing its historical volatility, Maithan Alloys Limited is 1.39 times less risky than UTI Asset. The stock trades about -0.01 of its potential returns per unit of risk. The UTI Asset Management is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  123,380  in UTI Asset Management on October 2, 2024 and sell it today you would earn a total of  11,820  from holding UTI Asset Management or generate 9.58% return on investment over 90 days.

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

Maithan Alloys Limited  vs.  UTI Asset Management

Maithan Alloys

Risk-Adjusted Performance

0 of 100

Very Weak

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

UTI Asset Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UTI Asset Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, UTI Asset may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Maithan Alloys and UTI Asset

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

The idea behind Maithan Alloys Limited and UTI Asset Management 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.