Correlation Between Manaksia Coated and India Glycols

Can any of the company-specific risk be diversified away by investing in both Manaksia Coated and India Glycols 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 India Glycols 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 India Glycols Limited, you can compare the effects of market volatilities on Manaksia Coated and India Glycols 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 India Glycols. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manaksia Coated and India Glycols.

Diversification Opportunities for Manaksia Coated and India Glycols

0.39

Correlation Coefficient

Manaksia Coated  India Glycols

Weak diversification

The 3 months correlation between Manaksia and India is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Manaksia Coated Metals and India Glycols Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Glycols Limited 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 India Glycols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Glycols Limited has no effect on the direction of Manaksia Coated i.e., Manaksia Coated and India Glycols go up and down completely randomly.

Pair Corralation between Manaksia Coated and India Glycols

Assuming the 90 days trading horizon Manaksia Coated Metals is expected to generate 0.88 times more return on investment than India Glycols. However, Manaksia Coated Metals is 1.13 times less risky than India Glycols. It trades about 0.02 of its potential returns per unit of risk. India Glycols Limited is currently generating about -0.11 per unit of risk. If you would invest  7,797  in Manaksia Coated Metals on December 2, 2024 and sell it today you would earn a total of  56.00  from holding Manaksia Coated Metals or generate 0.72% return on investment over 90 days.

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

Manaksia Coated Metals  vs.  India Glycols Limited

Manaksia Coated Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manaksia Coated Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Manaksia Coated is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

India Glycols Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days India Glycols Limited 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Manaksia Coated and India Glycols

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

The idea behind Manaksia Coated Metals and India Glycols 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.