Correlation Between Manaksia Steels and Fertilizers

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

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

Diversification Opportunities for Manaksia Steels and Fertilizers

-0.11

Correlation Coefficient

Manaksia Steels  Fertilizers

Good diversification

The 3 months correlation between Manaksia and Fertilizers is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Manaksia Steels Limited and Fertilizers and Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizers and Chemicals and Manaksia Steels 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 Steels Limited are associated (or correlated) with Fertilizers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizers and Chemicals has no effect on the direction of Manaksia Steels i.e., Manaksia Steels and Fertilizers go up and down completely randomly.

Pair Corralation between Manaksia Steels and Fertilizers

Assuming the 90 days trading horizon Manaksia Steels Limited is expected to under-perform the Fertilizers. But the stock apears to be less risky and, when comparing its historical volatility, Manaksia Steels Limited is 1.35 times less risky than Fertilizers. The stock trades about -0.04 of its potential returns per unit of risk. The Fertilizers and Chemicals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  85,080  in Fertilizers and Chemicals on October 23, 2024 and sell it today you would earn a total of  9,630  from holding Fertilizers and Chemicals or generate 11.32% return on investment over 90 days.

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

Manaksia Steels Limited  vs.  Fertilizers and Chemicals

Manaksia Steels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manaksia Steels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fertilizers and Chemicals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizers and Chemicals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fertilizers unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manaksia Steels and Fertilizers

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

The idea behind Manaksia Steels Limited and Fertilizers and Chemicals 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 CEOs Directory module to screen CEOs from public companies around the world.