Correlation Between Manaksia Coated and Home First

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

By analyzing existing cross correlation between Manaksia Coated Metals and Home First Finance, you can compare the effects of market volatilities on Manaksia Coated and Home First 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 Manaksia Coated with a short position of Home First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manaksia Coated and Home First.

Diversification Opportunities for Manaksia Coated and Home First

-0.47

Correlation Coefficient

Manaksia Coated  Home First

Very good diversification

The 3 months correlation between Manaksia and Home is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Manaksia Coated Metals and Home First Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home First Finance and Manaksia Coated 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 Manaksia Coated Metals are associated (or correlated) with Home First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home First Finance has no effect on the direction of Manaksia Coated i.e., Manaksia Coated and Home First go up and down completely randomly.

Pair Corralation between Manaksia Coated and Home First

Assuming the 90 days trading horizon Manaksia Coated Metals is expected to generate 1.51 times more return on investment than Home First. However, Manaksia Coated is 1.51 times more volatile than Home First Finance. It trades about 0.12 of its potential returns per unit of risk. Home First Finance is currently generating about 0.04 per unit of risk. If you would invest  1,796  in Manaksia Coated Metals on September 20, 2024 and sell it today you would earn a total of  8,947  from holding Manaksia Coated Metals or generate 498.16% return on investment over 90 days.

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

Manaksia Coated Metals  vs.  Home First Finance

Manaksia Coated Metals

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Manaksia Coated displayed solid returns over the last few months and may actually be approaching a breakup point.

Home First Finance

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Manaksia Coated and Home First

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

The idea behind Manaksia Coated Metals and Home First Finance 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.